GUARANTY AND SURETY CASES 1. [G.R. No. 117660. December 18, 2000] AGRO CONGLOMERATES, NC. !"# MARO SORANO, $e%&%&o"er', ('. T)E )ON. COURT O* A++EALS !"# REGENT SANGS !"# LOAN -AN, NC., re'$o"#e"%'. DECSON /USUM-NG, J /USUM-NG, J . .
This is a petition for review challenging the decision [1] dated October 17, 1994 of the Court of Appeals in CA!"#" $o" %&9%%, which affir'ed in toto the (udg'ent of the )anila #egional Trial Trial Court, *ranch &7, in consolidated Cases $os" +%7%74, +%7%++, +%7-4%" This petition petition spri springs ngs fro' thre threee co'p co'plain laints ts for su's of 'one. file filed d b. respondent ban/ against herein petitioners" 0n the decision of the Court of Appeals, petitioners were ordered to pa. respondent ban/, as follows 2herefore, (udg'ent is hereb. rendered in favor of plaintiff and against defendants, as follows 13 0n Civi Civill Case $o" +%7% +%7%74, 74, defe defendant ndantss [peti [petition tioners, ers, here herein] in] are ordered orde red (ointl. and seve several rall., l., to pa. to plai plaintiff ntiff the a'ou a'ount nt of 7+,&1&"&9, together with interest and service charge thereon, at the ratess of 145 and %5 per annu rate annu', ', resp respecti ectivel vel., ., co'puted fro' $ove'ber 16, 19+&, until full. paid, plus stipulated penalt. on unpaid principal at the rate of 5 per annu', co'puted fro' $ove'ber 16, 19+&, plus 1-5 as liuidated da'age plus 165 of the total a'ount due, as attorne.s fees, plus costs8 &3 0n Civil Case $o" +%7%++, defendant is ordered to pa. plaintiff the a'ount of %&,911"%9, together with interest and service charge thereo the reon n at the rate of 145 and %5 pe perr ann annu', u', respect respective ivel. l.,, co'puted fro' anuar. 1-, 19+%, until full. paid, plus stipulated penalt. on unpaid principal at the rate of 5 per annu', co'puted fro' anuar. 1-, 19+%, plus liuidated da'ages da'ages euivalent to 1-5 of the total a'ount due, plus attorne.s fees euivalent to 165 of the total a'ount due, plus costs8 and %3 0n Civil Case $o" +%7-4%, defendant is ordered to pa. plaintiff, on the first cause of action, the a'ount of -16,666"66, together with interest and service charge thereon, at the rates of 145 and &5 per annu', respectivel., respectivel., co'puted fro' )arch 1%, 19+%, until full. paid, plus a penalt. of 5 per annu', based on the outstanding principal of the loan, co'puted fro' )arch 1%, 19+%, until full. paid8 and on the second cause of action, the a'ount of 494,9%"71, together with interest and service charge thereon at the rates of 145 and &5, per annu', respectivel., co'puted fro' )arch %6, 19+%, until full. paid, plus pl us a pe penal nalt. t. cha charge rge of 5 pe perr ann annu', u', ba based sed on the unp unpaid aid
principal, co'puted fro' )arch %6, 19+%, until full. paid, plus :on both causes of action3 an a'ount eual to 1-5 of the total a'ounts due, as liuidated da'ages, plus attorne.s fees eual to 165 of the total a'ounts due, plus costs"[&] *ased on the records, the following are the factual antecedents" On ul. 17, 19+&, petitioner Agro Conglo'erates, 0nc" as vendor, sold two parcels of land to 2o parcels 2onderl nderland and ;oo ;ood d 0ndu 0ndustrie stries, s, 0nc" 0n their )e'orandu' )e'orandu' of Agree'ent, [%] the par partie tiess cov coven enant anted ed tha thatt the pur purcha chase se pri price ce of ;i ;ive ve )il )illio lion n :-,666,666"663 esos would be settled b. the vendee, under the following ter's and conditions :13 One )illion :1,666,666"663 esos shall be paid in cash upon the sign signing ing of the agre agree'e e'ent8 nt8 :&3 Tw Two o )ill )illion ion :&, :&,666,66 666,666"663 6"663 esos wort worth h of co''on shares of stoc/ of the 2onderland ;ood 0ndustries, 0nc"8 and :%3 The balance bala nce of &,66 &,666,666 6,666"66 "66 shal shalll be paid in four eual install'ents, install'ents, the first install'ent falling due, 1+6 da.s after the signing of the agree'ent and ever. si< 'onths thereafter, with an interest rate of 1+5 per annu', to be advanced b. the vendee upon the signing of the agree'ent" On ul. 19, 19+&, the vendor, the vendee, and the respondent ban/ #egent =avings > ?oan *an/ :for'erl. =u''a =avings > ?oan Association3, e
of the F@$O#, the F@$@@ will be the one liable to pa. the entire proceeds thereof including interest and other charges"[-] This addendu' was not notariGed" Conseuentl., petitioner )ario =oriano signed as 'a/er several pro'issor. notes,[] pa.able to the respondent ban/"Thereafter, the ban/ released the proceeds of the loan to petitioners" owever, petitioners failed to 'eet their obligations as the. fell due" uring that ti'e, the ban/ was e
Au gu st 1& , 19 +&
19 +% Au g" 7, 19 +%
C& (&5 a ) C!%&,n" a. 'e 91 1-1
861"%, , 9 1919 +%+% 7 Au 8 g" 8
ul . 19 , 19 +&
14 , 19 +%
C& (&5 - ) u C!16,ar ne 'e 66 ch 11 866"61%, 6 , 19 19+% 7 +%=e 9 pt" 4
=e 94, 9, pt 9% ) 19 e "7ar +% ' 1 ch be %6u r , ne 14 19&+ , +%, 19 19 +& +% =e pt" Oc & to , be 19 r +% 1, 19 +& 0n their answer, petitioners interposed the defense of novation and insisted there was a valid substitution of debtor" The. alleged that the addendu' specificall. states that although the pro'issor. notes were in their na'es, 2onderland shall be responsible for the pa.'ent thereof" The trial court held that petitioners are liable, to wit The evidences, however, disclose that 2onderland did not co'pl. with its obligation under said Addendu' :@
defendants failed to file a thirdpart. co'plaint against 2onderland, which shows the wea/ness of its stand that 2onderland is answerable to 'a/e said pa.'ents" [7] etitioners appealed to the Court of Appeals" The trial courts decision was affir'ed b. the appellate court" ence, this recourse, wherein petitioners raise the sole issue of 2@T@# T@ COB#T O; A@A?= @##@ 0$ $OT ;0$0$! TAT T@ A@$B), =0!$@ *E T@ @T0T0O$@#=, #@=O$@$T *A$H A$ 2O$@#?A$ 0$C", CO$=T0TBT@= A $OFAT0O$ O; T@ CO$T#ACT *E =B*=T0TBT0O$ O; @*TO#, 20C @D@)T= T@ @T0T0O$@#= ;#O) A$E ?0A*0?0TE OF@# T@ #O)0==O#E $OT@=" #evealed b. the facts on record, the conflict a'ong the parties started fro' a contract of sale of a far'land between petitioners and 2onderland ;ood 0ndustries, 0nc" As found b. the trial court, no such sale 'aterialiGed" 'aterialiGed" A contract of sale is a reciprocal transaction" transaction" The obligation or pro'ise of each part. is the cause or consideration for the obligation or pro'ise b. the other" The vendee is obliged to pa. the price, while the vendor 'ust deliver actual possession of the land" 0n the instant case the original plan was that the initial pa.'ents would be paid in cash" =ubseuentl., the parties :with the participation of respondent ban/3 e
either b. changing the ob(ect or principal conditions, or by substituting another in place of the debtor, or b. subrogating a third person in the rights of the creditor"
0n orde orderr that a nova novation tion can ta/e place, place, the concurrence concurrence of the following following reuisites [14] are indispensable [1%]
13 There 'ust be a previous valid obligation8 &3 Ther Theree 'ust be an agree'ent agree'ent of the parties parties conce concerned rned to a new contract8 %3 There 'ust be the e
bound under the law to pa. the clai's of respondent ban/ fro' who' the. had obtained the loan proceeds" :)ERE*ORE, the petition is @$0@ for lac/ of 'erit" The assailed decision of the Court of Appeals dated October 17, 1994 is A;;0#)@" Costs against petitioners"
On ;ebruar. +, 199%, the trial court granted issuance of a writ of replevin directing the sheriff to ta/e the 0suGu (eepne. into his custod." Conseuentl., on ;ebruar. &&, 199%, =heriff Arnel )agat seiGed the sub(ect vehicle and turned over the sa'e to plaintiff spouses 0ba(an"[4] On ;ebruar. 1-, 199%, the spouses *artolo'e filed with the trial court a 'otion to uash the writ of replevin and to order the return of the (eepne. to the'"
SO ORDERED. 2. [G. R. No. 127261. Se$%ember 7, 2001] SA YAN SURETY ; NSUR ANC E C OR +OR AT ON, petitioner, vs. T)E )ONORA-LE COURT O*A++EALS, S+OUSES
On )a. %, 199%, o'inador F" 0ba(an, father of plaintiff anilo 0ba(an, filed with the trial court a 'otion for leave of court to intervene, stating that he has a right superior to the plaintiffs over the ownership and possession of the sub(ect vehicle" On une 1, 199%, the t rial court granted the 'otion to intervene"
DECSON
On August +, 199%, the trial court issued an order granting the 'otion to uash the writ of replevin and ordering plaintiff )ila 0ba(an to return the sub(ect (eepne. to the intervenor o'inador 0ba(an"[-]
+ARDO, J .
T>e C!'e
The case is a petition to review and set aside a decision[1] of the Court of Appeals affir'ing that of the #egional Trial Court, *ian, ?aguna, *ranch &4, holding the suret. liable to the intervenor in lieu of the principal on a replevin bond" T>e *!c%'
The facts, as found b. the Court of Appeals,[&] are as follows On ;ebruar. &, 199%, the spouses anilo 0ba(an and )ila A'be 0ba(an filed with the #egional Trial Court, ?aguna, *ian a co'plaint against spouses un and =usan *artolo'e, for replevin to recover fro' the' the possession of an 0suGu (eepne., with da'ages" laintiffs 0ba(an alleged that the. were the owners of an 0suGu (eepne. which was forcibl. and unlawfull. ta/en b. defendants un and =usan *artolo'e on ece'ber +, 199&, while par/ed at their residence" On ;ebruar. +, 199%, plaintiffs filed a replevin bond through petitioner Fisa.an =uret. > 0nsurance Corporation" The contract of suret. provided thus 2@#@;O#@, we, sps" anilo 0ba(an and )ila 0ba(an and the F0=AEA$ =B#@TE > 0$=B#A$C@ CO#", of Cebu, Cebu, with branch office at )anila, (ointl. and severall. bind ourselves in the su' of Three undred Thousand esos :%66,666"663 for the return of the propert. to the defendant, if the return thereof be ad(udged, and for the pa.'ent to the defendant of such su' as heIshe 'a. recover fro' the plaintiff in the action"[%]
On August %1, 199%, the trial court ordered the issuance of a writ of replevin directing the sheriff to ta/e into his custod. the sub(ect 'otor vehicle and to deliver the sa'e to the intervenor who was the registered owner"[] On =epte'ber 1, 199%, the trial court issued a writ of replevin in favor of intervenor o'inador 0ba(an but it was returned unsatisfied" On )arch 7, 1994, intervenor o'inador 0ba(an filed with the trial court a 'otionIapplication for (udg'ent against plaintiffs bond" On une , 1994, the trial court rendered (udge'ent the dispositive portion of which reads 2@#@;O#@, in the light of the foregoing pre'ises, (udg'ent is hereb. rendered in favor of o'inador 0ba(an and against )ila 0ba(an and the Fisa.an =uret. and 0nsurance Corporation ordering the' to pa. the for'er (ointl. and severall. the value of the sub(ect (eepne. in the a'ount of 1-6,666"66 and such other da'ages as 'a. be proved b. o'inador 0ba(an plus costs"[7] On une &+, 1994, Fisa.an =uret. and 0nsurance Corporation and )ila 0ba(an filed with the trial court their respective 'otions for reconsideration" On August 1, 1994, the trial court denied both 'otions" On $ove'ber &4, 199-, Fisa.an =uret. and 0nsurance Corporation :hereafter Fisa.an =uret.3 appealed the decision to the Court of Appeals" [+]
On August %6, 199, the Court of Appeals pro'ulgated its decision affir'ing the (udg'ent of the trial court"[9] On =epte'ber 19, 199, petitioner filed a 'otion for reconsideration"[16] On ece'ber &, 199, the Court of Appeals denied the 'otion for reconsideration for lac/ of 'erit"[11] ence, this petition"[1&] T>e ''e
The issue in this case is whether the suret. is liable to an intervenor on a replevin bond posted b. petitioner in favor of respondents"[1%] #espondent o'inador 0ba(an asserts that as intervenor, he assu'ed the personalit. of the original defendants in relation to the plaintiffs bond for the issuance of a writ of replevin" etitioner Fisa.an =uret. contends that it is not liable to the intervenor, o'inador 0ba(an, because the intervention of the intervenor 'a/es hi' a part. to the suit, but not a beneficiar. to the plaintiffs bond" The intervenor was not a part. to the contract of suret., hence, he was not bound b. the contract" T>e Cor%' R5&"?
The petition is 'eritorious" An intervenor is a person, not originall. i'pleaded in a proceeding, who has legal interest in the 'atter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversel. affected b. a distribution or other disposition of propert. in the custod. of the court or of an officer thereof"[14] )a. an intervenor be considered a part. to a contract of suret. which he did not sign and which was e
person, the suret., engages to be answerable for the debt, default or 'iscarriage of another, /nown as the principal"[1+] The obligation of a suret. cannot be e 0nsurance Corporation is not liable under the replevin bond to the intervenor, respondent o'inador F" 0ba(an"
$o costs" SO ORDERED.
%" 0?00$@ $AT0O$A? *A$H, plaintiffappellant, vs" )ACAA$!A #OBC@#= 0$C", defendant" ?A#0@? =B#@TE A$ 0$=B#A$C@ CO", defendantappellee" !"#" $o" ?+%49 K 19-6-&% @C0=0O$ ?A*#AO#, " Appeal against an order of the Court of ;irst 0nstance of )anila, on" *ienvenido A" Tan, presiding, dis'issing the co'plaint as against laridel =uret. and 0nsurance Co'pan." Co'plaint is b. hilippine $ational *an/ against )acapanga roducers 0nc" and laridel =uret. and 0nsurance Co" rincipal allegations are On ece'ber &, 19-&, ?uGon =ugar Co'pan. leased a sugar 'ill located at Calu'pit, *ulacan to )acapanga roducers beginning with the crop .ear 19-&-% at a 'ini'u' annual ro.alt. of -6,666, which shall be a lien on the sugar produced b. the lessee and shall be paid before sale or re'oval of sugar fro' warehouse :cop. of lease contract attached as Anne< A to the Co'plaint38 on ece'ber &, 19-&, )acapanga roducers, as principal, and laridel =uret. > 0nsurance, as suret., e
faithful co'pliance b. )acapanga roducers of all ter's and conditions of the lease :cop. of bond attached as Anne< * to Co'plaint38 on ece'ber &1, 19-%, ?uGon =ugar assigned to plaintiff the pa.'ent due fro' )acapanga roducers in the su' of -6,666, representing ro.alt. for the lease of the sugar 'ill for the crop .ear 19-&-% :deed of assign'ent attached as Anne< C to Co'plaint38 plaintiff notified )acapanga roducers and laridel =uret. > 0nsurance of said assign'ent8 plaintiff had de'anded fro' )acapanga roducers pa.'ent of said ro.alt. of -6,666, but the latter has refused and refuses to 'a/e pa.'ent8 and plaintiff also 'ade de'and on laridel =uret. > 0nsurance for said pa.'ent, but the latter refused and refuses to 'a/e pa.'ent" laridel =uret. > 0nsurance 'oved to dis'iss the co'plaint for failure to state cause of action, alleging that it is a guarantor and as such is responsible onl. if )acapanga roducers has no propert. or assets to pa. its obligation as lessee" laintiff opposed the 'otion calling attention to the provision of the perfor'ance bond in which )acapanga roducers and laridel =uret. > 0nsurance, the for'er as principal and the latter as suret., agreed to be held and fir'l. bound unto ?uGon =ugar in the penal su' of -6,666, Lfor the pa.'ent of which, well and trul. be 'ade, we bind ourselves, our heirs, e 0nsurance bound itself solidaril. with )acapanga roducers, it beca'e a suret. in accordance with Article &647, par" & of the Civil Code" The trial court dis'issed the co'plaint against laridel =uret. > 0nsurance and subseuentl. denied a 'otion to reconsider the order of dis'issal" The action (oining laridel =uret. > 0nsurance as part. defendant is (ustified b. the following provisions and cases" LA#T" &647" " " "
The creditor 'a. sue an. of the solidar. debtors or all of the' si'ultaneousl." An action instituted against one shall not be a bar to those which 'a. be subseuentl. brought against the others, as long as the debt has not been entirel. satisfied" :)olina vs" e la #iva, 7 hil", %4-8 Chinese Cha'ber of Co''erce vs" ua Te Ching, 1 hil", 468 0nchausti > Co" vs" Eulo, %4 hil", 97+"3L :;errer vs" ?opeG and =antos, - hil", -9&"3 0t is also argued on behalf of laridel =uret. and 0nsurance that as it was not a part. to the assign'ent, and sa'e was 'ade without its consent, it is, therefore, discharged fro' its obligation" An assign'ent without /nowledge or consent of the suret. is not a 'aterial alteration of the contract, sufficient to discharge the suret. :=tearns ?aw of =uret.ship, @lder, fifth edition, p" 11%"3 There is, besides, no allegation in the co'plaint, or provision in the deed of assign'ent, or an. change therein that 'a/es the obligation of laridel =uret. > 0nsurance 'ore onerous than that stated in the perfor'ance bond" =uch assign'ent did not, therefore, release the laridel =uret. > 0nsurance fro' its obligation under the suret. bond" :*an/ of " 0" vs" Albalade(o . Cia, -% hil", 1418 *an/ of " 0" vs" !ooch, et al", 4- hil", -148 Fisa.an istributors, 0nc" vs" ;lores, et al", 9& hil", 14-, 4+ Off" !aG", 47+48 el #osario vs" $ava, 9- hil", %7, -6 Off" !aG", 41+9"3 0t is lastl. contended that as plaintiff or the lessor had a lien in the sugar produced, and failed to proceed against it or enforce such lien, laridel =uret. > 0nsurance was released thereb." There is no allegation to this effect in the co'plaint, that lessor or plaintiff ever had possession or control of the sugar, or ever waived or released the lien thereon" Appellee cannot raise the issue in a 'otion to dis'iss" The order of dis'issal is hereb. reversed, and the appellee ordered to answer the co'plaint, with costs"
0f a person binds hi'self solidaril. with the principal debtor, the provisions of section 4, Charter %, Title 0 of this *oo/ shall be observed" 0n such case the contract is called a suret.ship"L :Civil Code"3
4" @=T#@??A A?)A#@=, petitioner, vs" COB#T O; A@A?= and )"*" ?@$0$!
LThe sureties on the superedeas bond given in this particular case, were (ointl. and severall. liable with principal debtor and that an e
!"#" $o" 1&496 K 199+6%%1
LArticle 1+&&, invo/ed b. the appellant, provides that Mif the suret. bound hi'self (ointl. with the principal debtor, the provisions of section fourth, chapter third, title first of this boo/ shall be observed,M that is of boo/ fourth of the Civil Code" =ection fourth of the chapter title, and boo/ 'entioned provides that Ma creditor 'a. sue an. of the (oint debtor or all of the' si'ultaneousl."M :Art" 11443" 0n confor'it. with this provision, the sureties ua Ti and Eap Chatco having bound the'selves in solidu' :(ointl. and severall.3 with the principal debtor ua Te Ching, the creditor, that is, the Chinese Cha'ber of Co''erce, 'a. sue an. of the' or all of the' si'ultaneousl.8 which is what the Chinese Cha'ber of Co''erce did in filing suit against the (oint and several debtors"L :Chinese Cha'ber of Co''erce vs" ua Te Ching, 1 hil", 46"3 LAs the principal debtorMs obligationM is valid and has not been satisfied b. his estate, and as the defendant sureties bound the'selves solidaril., article 1144 of the Civil Code is applicable, which provides, as follows
CO#O#AT0O$, respondents"
@C0=0O$ #@!A?AO, 2here a part. signs a pro'issor. note as a co'a/er and binds herself to be (ointl. and severall. liable with the principal debtor in case the latter defaults in the pa.'ent of the loan, is such underta/ing of the for'er dee'ed to be that of a suret. as an insurer of the debt, or of a guarantor who warrants the solvenc. of the debtorJ ursuant to a pro'issor. note dated )arch 1%, 1996, private respondent )"*" ?ending Corporation e
be co'puted ever. %6 da.s fro' the date thereof" 1 On four occasions after the e
contracted until full. paid8 &" The su' euivalent to the stipulated penalt. of three percent :%53 per 'onth, of the outstanding balance8 %" Attorne.Ms fees at &-5 of the total a'ount due per stipulations8
Conseuentl., on the basis of petitionerMs solidar. liabilit. under t he pro'issor. note, respondent corporation filed a co'plaint % against petitioner al'ares as the lone part.defendant, to the e
4" lus costs of suit" 7 Contrar. to the findings of the trial court, respondent appellate court declared that petitioner al'ares is a suret. since she bound herself to be (ointl. and severall. or solidarit. liable with the principal debtors, the AGarraga spouses, when she signed as a co'a/er" As such, petitioner is pri'aril. liable on the note and hence 'a. be sued b. the creditor corporation for the entire obligation" 0t also adverted to the fact that petitioner ad'itted her liabilit. in her Answer although she clai's that the AGarraga spouses should have been i'pleaded" #espondent court ordered the i'position of the stipulated 5 interest and %5 penalt. charges on the ground that the Bsur. ?aw is no longer enforceable pursuant to Central *an/ Circular $o" 96-" ;inall., it rationaliGed that even if the pro'issor. note were to be considered as a contract of adhesion, the sa'e is not entirel. prohibited because the one who adheres to the contract is free to re(ect it entirel.8 if he adheres, he gives his consent" ence this petition for review on certiorari wherein it is asserted that A" The Court of Appeals erred in ruling that al'ares acted as suret. and is therefore solidaril. liable to pa. the pro'issor. note" 1" The ter's of the pro'issor. note are vague" 0ts conflicting provisions do not establish al'aresM solidar. liabilit." &" The pro'issor. note contains provisions which establish the co'a/erMs liabilit. as that of a guarantor" %" There is no sufficient basis for concluding that al'aresM liabilit. is solidar." 4" The pro'issor. note is a contract of adhesion and should be construed against )"*" ?ending Corporation" -" al'ares cannot be co'pelled to pa. the loan at this point" *" Assu'ing that al'aresM liabilit. is solidar., the Court of Appeals erred in strictl. i'posing the interests and penalt. charges on the outstanding balance of the pro'issor. note" The foregoing contentions of petitioner are denied and contradicted in their 'aterial points b. respondent corporation" The. are further refuted b. accepted doctrines in the A'erican (urisdiction after which we patterned our statutor. law on suret.ship
and guarant." This case then affords us the opportunit. to 'a/e an e
thereon" Thus, an. apparent a'biguit. in the contract should be strictl. construed against private respondent pursuant to Art" 1%77 of the Civil Code" 9 etitioner accordingl. concludes that her liabilit. should be dee'ed restricted b. the clause in the third paragraph of the pro'issor. note to be that of a guarantor" )oreover, petitioner sub'its that she cannot as .et be co'pelled to pa. the loan because the principal debtors cannot be considered in default in the absence of a (udicial or e
to fulfill the obligation of the principal debtor in case the latter should fail to do so" 0f a person binds hi'self solidaril. with the principal debtor, the provisions of =ection 4, Chapter %, Title 0 of this *oo/ shall be observed" 0n such case the contract is called a suret.ship" 0t is a cardinal rule in the interpretation of contracts that if the ter's of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal 'eaning of its stipulation shall control" 1% 0n the case at bar, petitioner e
other hand, does not contract that the principal will pa., but si'pl. that he is able to do so" &6 0n other words, a suret. underta/es directl. for the pa.'ent and is so responsible at once if the principal debtor 'a/es default, while a guarantor contracts to pa. if, b. the use of due diligence, the debt cannot be 'ade out of the principal debtor" &1 uintessentiall., the underta/ing to pa. upon default of the principal debtor does not auto'aticall. re'ove it fro' the a'bit of a contract of suret.ship" The second and third paragraphs of the aforeuoted portion of the pro'issor. note do not contain an. other condition for the enforce'ent of respondent corporationMs right against petitioner" 0t has not been shown, either in the contract or the pleadings, that respondent corporation agreed to proceed against herein petitioner onl. if and when the defaulting principal has beco'e insolvent" A contract of suret.ship, to repeat, is that wherein one lends his credit b. (oining in the principal debtorMs obligation, so as to render hi'self directl. and pri'aril. responsible with hi', and without reference to the solvenc. of the principal" && 0n a desperate effort to e
onl. goes to show that, fro' the ver. start, petitioner considered herself euall. bound b. the contract of the principal 'a/ers" 0n this regard, we need onl. to reiterate the rule that a suret. is bound euall. and absolutel. with the principal, & and as such is dee'ed an original pro'isor and debtor fro' the beginning" &7 This is because in suret.ship there is but one contract, and the suret. is bound b. the sa'e agree'ent which binds the principal" &+ 0n essence, the contract of a suret. starts with the agree'ent, &9 which is precisel. the situation obtaining in this case before the Court" 0t will further be observed that petitionerMs underta/ing as co'a/er i''ediatel. follows the ter's and conditions stipulated between respondent corporation, as creditor, and the principal obligors" A suret. is usuall. bound with his principal b. the sa'e instru'ent, e
i''aterial" 0n the absence of a statutor. or contractual reuire'ent, it is not necessar. that pa.'ent or perfor'ance of his obligation be first de'anded of the principal, especiall. where de'and would have been useless8 nor is it a reuisite, before proceeding against the sureties, that the principal be called on to account" % The underl.ing principle therefor is that a suret.ship is a direct contract to pa. the debt of another" A suret. is liable as 'uch as his principal is liable, and absolutel. liable as soon as default is 'ade, without an. de'and upon the principal whatsoever or an. notice of default" %7 As an original pro'isor and debtor fro' the beginning, he is held ordinaril. to /now ever. default of his principal" %+ etitioner uestions the propriet. of the filing of a co'plaint solel. against her to the e
principal, 4 or the fact that the re'edies against the principal 'a. be lost b. lapse of ti'e, are i''aterial" 47 The raison dMPQRStre for the rule is that there is nothing to prevent the creditor fro' proceeding against the principal at an. ti'e" 4+ At an. rate, if the suret. is dissatisfied with the degree of activit. displa.ed b. the creditor in the pursuit of his principal, he 'a. pa. the debt hi'self and beco'e subrogated to all the rights and re'edies of the creditor" 49 0t 'a. not be a'iss to add that lenienc. shown to a debtor in default, b. dela. per'itted b. the creditor without change in the ti'e when the debt 'ight be de'anded, does not constitute an e
16" A .ear thereafter, 0 received a telephone call fro' the secretar. of )r" *anusing who re'inded that the loan of )erl.n and Os'eNa AGarraga, together with interest and penalties thereon, has not been paid" =ince 0 had no available funds at that ti'e, 0 offered to pa. )* ?ending b. delivering to the' a parcel of land which 0 own" )r" *anusingMs secretar., however, refused '. offer for the reason that the. are not interested in real estate" 11" 0n )arch 199&, 0 received a cop. of the su''ons and of the co'plaint filed against 'e b. )* ?ending before the #TC0loilo" After learning that a co'plaint was filed against 'e, 0 instructed =heila !atia to go to )* ?ending and reiterate '. first offer to pa. the outstanding balance of the principal obligation of )erl.n AGarraga in the a'ount of %6,666"66" 1&" )s" !atia tal/ed to the secretar. of )r" *anusing who referred her to Att." Fenus, counsel of )* ?ending" 1%" Att." Fenus infor'ed )s" !atia that he will consult )r" *anusing if '. offer to pa. the outstanding balance of the principal obligation loan :sic3 of )erl.n and Os'eNa AGarraga is acceptable" ?ater, Att." Fenus infor'ed )s" !atia that '. offer is not acceptable to )r" *anusing" The purported offer to pa. 'ade b. petitioner can not be dee'ed sufficient and substantial in order to effectivel. discharge her fro' liabilit." There are a nu'ber of circu'stances which con(ointl. inveigh against her aforesaid theor." 1" #espondent corporation cannot be faulted for not i''ediatel. de'anding pa.'ent fro' petitioner" 0t was petitioner who initiall. reuested that the creditor tr. to collect fro' her principal first, and she offered to pa. onl. in case the creditor fails to collect" The dela., if an., was occasioned b. the fact that respondent corporation 'erel. acuiesced to the reuest of petitioner" At an. rate, there was here no actual offer of pa.'ent to spea/ of but onl. a co''it'ent to pa. if the principal does not pa." &" etitioner 'ade a second atte'pt to settle the obligation b. offering a parcel of land which she owned" #espondent corporation was acting well within its rights when it refused to accept the offer" The debtor of a thing cannot co'pel the creditor to receive a different one, although the latter 'a. be of the sa'e value, or 'ore valuable than that which is due" -4 The obligee is entitled to de'and fulfill'ent of the obligation or perfor'ance as stipulated" A change of the ob(ect of the obligation would constitute novation reuiring the e
or service in which the obligation consists has been co'pletel. delivered or rendered, as the case 'a. be" - 0n other words, the prestation 'ust be fulfilled co'pletel." A person entering into a contract has a right to insist on its perfor'ance in all particulars" -7
in our opinion, unreasonable and i''oderate, considering the 'ini'al unpaid a'ount involved and the e
etitioner cannot co'pel respondent corporation to accept the a'ount she is willing to pa. because the 'o'ent the latter accepts the perfor'ance, /nowing its inco'pleteness or irregularit., and without e
2@#@;O#@, the (udg'ent appealed fro' is hereb. A;;0#)@, sub(ect to the )O0;0CAT0O$ that the penalt. interest of %5 per 'onth is hereb. deleted and the award of attorne.Ms fees is reduced to 16,666"66"
This notwithstanding, however, we find and so hold that the penalt. charge of %5 per 'onth and attorne.Ms fees euivalent to &-5 of the total a'ount due are highl. ineuitable and unreasonable" 0t 'ust be re'e'bered that fro' the principal loan of %6,666"66, the a'ount of 1,%66"66 had alread. been paid even before the filing of the present case" Article 1&&9 of the Civil Code provides that the court shall euitabl. reduce the penalt. when the principal obligation has been partl. or irregularl. co'plied with b. the debtor" And, even if there has been no perfor'ance, the penalt. 'a. also be reduced if it is iniuitous or leonine" 0n a case previousl. decided b. this Court which li/ewise involved private respondent )"*" ?ending Corporation, and which is substantiall. on all fours with the one at bar, we decided to eli'inate altogether the penalt. interest for being e
=O O#@#@" -" =@CB#0TE AC0;0C A==B#A$C@ CO#O#AT0O$, etitioner, versus T@ O$" A)@?0A T#0A0$;A$T@, 0n her official capacit. as residing udge, #egional Trial Court, *ranch 9, )anila8 T@ @O?@ O; T@ 0?00$@=, represented b. =pouses #@E$A?O and @$A0A A$B#@=8 and #@E$A?O #" *BAO$, 0n his official capacit. as =heriff 0F, #egional Trial Court, *ranch 9, )anila, #espondents" !"#" $o" 144746 K &66-6+%1 SECOND DSON
DECSON
C)CONA@ARO, <.
*efore Bs is a petition for review on certiorari , assailing the ecision[1] and #esolution[&] of the Court of Appeals in CA!"#" = $o" -+147, dated 1 une &66 6 and && August &666, respectivel." The said ecision and #esolution declared that there was no grave abuse of discretion on the part of respondent udge in issuing the assailed order dated %1 )arch &666, which was the sub(ect in CA!"#" = $o" -+147" T)E *ACTS
The factual 'ilieu of the instant case can be traced fro' this CourtMs decision in !"#" $o" 16&14 pro'ulgated on 6- =epte'ber 1997" On & August 19++, #e.naldo AnGures instituted a co'plaint against Teresita FillaluG :FillaluG3 for violation of *atas a'bansa *lg" &&" The cri'inal infor'ation was brought before the #egional Trial Court, Cit. of )anila, and raffled off to *ranch 9, then presided over b. udge @dilberto !" =andoval, doc/eted as Cri'inal Case $o" +99&-7" An Ex-Parte )otion for reli'inar. Attach'ent[%] dated 6 )arch 19+9 was filed b. #e.naldo AnGures pra.ing that pending the hearing on the 'erits of the case, a 2rit
of reli'inar. Attach'ent be issued ordering the sheriff to attach the properties of FillaluG in accordance with the #ules"
&,-66,666"66" As reported b. the sheriff, petitioner refused to assu'e its obligation on the counterbond it posted for the discharge of the attach'ent 'ade b. FillaluG"[14]
On 6% ul. 19+9, the trial court issued an Order[4] for the issuance of a writ of preli'inar. attach'ent Lupon co'plainantMs posting of a bond which is hereb. fi
#e.naldo AnGures, through the private prosecutor, filed a )otion to roceed with !arnish'ent,[1-] which was opposed b. petitioner[1] contending that it should not be held liable on the counterattach'ent bond"
An attach'ent bond[-] was thereafter posted b. #e.naldo AnGures and approved b. the court" Thereafter, the sheriff attached certain properties of FillaluG, which were dul. annotated on the corresponding certificates of title"
The trial court, in its Order dated %1 )arch &666,[17] granted the )otion to roceed with !arnish'ent" The sheriff issued a ;ollowBp of !arnish'ent[1+] addressed to the residentI!eneral )anager of petitioner dated 6% April &666"
On &- )a. 1996, the trial court rendered a ecision[] on the case acuitting FillaluG of the cri'e charged, but held her civill. liable" The dispositive portion of the said decision is reproduced hereunder
On 67 April &666, petitioner filed a etition for Certiorari with reli'inar. 0n(unction andIor Te'porar. #estraining Order[19] with the Court of Appeals, see/ing the nullification of the trial courtMs order dated %1 )arch &666 granting the 'otion to proceed with garnish'ent" FillaluG was also na'ed as petitioner" The petitioners contended that the respondent udge, in issuing the order dated %1 )arch &666, and the sheriff co''itted grave abuse of discretion and grave errors of law in proceeding against the petitioner corporation on its counterattach'ent bond, despite the fact that said bond was not approved b. the =upre'e Court, and that the condition b. which said bond was issued did not happen"[&6]
2@#@;O#@, pre'ises considered, (udg'ent is hereb. rendered ACB0TT0$! the accused T@#@=0TA @" F0??A?B with cost de oficio" As to the civil aspect of the case however, accused is ordered to pa. co'plainant #e.naldo AnGures the su' of T2O )0??0O$ O$@ B$#@ T2@$TE T#@@ TOB=A$ ;OB# B$#@ :&,1&%,466"663 @=O= with legal rate of interest fro' ece'ber 1+, 19+7 until full. paid, the su' of -6,666"66 as attorne.Ms fees and the cost of suit"[7] FillaluG interposed an appeal with the Court of Appeals, and on %6 April 199&, the latter rendered its ecision,[+] the dispositive portion of which partl. reads 2@#@;O#@, in CA!"#" CF $o" &+7+6, the ecision of the #egional Trial Court of )anila, *ranch 9, dated )a. &-, 1996, as to the civil aspect of Cri'inal Case $o" +99&-7, is hereb. A;;0#)@, in all respects"""" The case was elevated to the =upre'e Court :!"#" $o" 16&143, and during its pendenc., FillaluG posted a counterbond in the a'ount of &,-66,666"66 issued b. petitioner =ecurit. acific Assurance Corporation"[9] FillaluG, on the sa'e date[16] of the counterbond, filed an Brgent )otion to ischarge Attach'ent"[11] On 6- =epte'ber 1997, we pro'ulgated our decision in !"#" $o" 16&14, affir'ing in toto the decision of the Court of Appeals" 0n view of the finalit. of this CourtMs decision in !"#" $o" 16&14, the private co'plainant 'oved for e
On 1 une &666, the Court of Appeals rendered a ecision,[&1] the dispositive portion of which reads 2@#@;O#@, pre'ises considered, the Court finds no grave abuse of discretion on the part of respondent (udge in issuing the assailed order" ence, the petition is dis'issed" A )otion for #econsideration[&&] was filed b. petitioner, but was denied for lac/ of 'erit b. the Court of Appeals in its #esolution[&%] dated && August &666" Bndeterred, petitioner filed the instant petition under #ule 4- of the 1997 #ules of Civil rocedure, with Brgent Application for a 2rit of reli'inar. 0n(unction andIor Te'porar. #estraining Order"[&4] On 1% ece'ber &666, this Court issued a #esolution[&-] reuiring the private respondents to file their Co''ent to the etition, which the. did" etitioner was reuired to file its #epl.[&] thereafter" )eanwhile, on 17 anuar. &661, petitioner and the spouses #e.naldo and enaida AnGures e
be paid" This would 'a/e the aggregate a'ount paid to the private respondents &,-66,666"66"[&9] There was, however, a proviso in the )OB which states that Lthis contract shall not be construed as a waiver or abandon'ent of the appellate review pending before the =upre'e Court and that it will be sub(ect to all such interi' orders and final outco'e of said case"L On 1% August &661, the instant petition was given due course, and the parties were obliged to sub'it their respective )e'oranda"[%6]
etitioner filed a #epl.[%4] dated 69 )a. &661 to private respondentsM Co''ent, ad'itting the binding effect of the bond as between the parties thereto" 2hat it did not subscribe to was the theor. that the attach'ent was ipso facto or auto'aticall. discharged b. the 'ere filing of the bond in court" =uch theor., according to petitioner, has no foundation" 2ithout an order of discharge of attach'ent and approval of the bond, petitioner sub'its that its stipulated liabilit. on said bond, pre'ised on their occurrence, could not possibl. arise, for to hold otherwise would be to tra'ple upon the statutoril. guaranteed right of the parties to contractual autono'."
SSUES
The petitioner raises the following issues for the resolution of this Court M!&" ''e
2@T@# O# $OT T@ COB#T O; Appeals co''itted reversible error in affir'ing the %1 'arch &666 order of public respondent (udge which allowed e
*ased on the circu'stances present in this case, we find no co'pelling reason to reverse the ruling of the Court of Appeals" Over the .ears, in a nu'ber of cases, we have 'ade certain pronounce'ents about counterbonds" 0n Tijam v. Sibonghanoy ,[%-] as reiterated in anguard !ssurance Corp. v. Court of !ppeals,[%] we held " " " [A]fter the (udg'ent for the plaintiff has beco'e e
T)E COURTS RULNG
0n "u#on Steel Coporation v. Sia, et al. [%7] etitioner see/s to escape liabilit. b. contending, in the 'ain, that the writ of attach'ent which was earlier issued against the real properties of FillaluG was not discharged" =ince the writ was not discharged, then its liabilit. did not accrue" The alleged failure of this Court in !"#" $o" 16&14 to approve the counterbond and to cause the discharge of the attach'ent against FillaluG prevented the happening of a condition upon which the counterbondMs issuance was pre'ised, such that petitioner should not be held liable thereon"[%1] etitioner further asserts that the agree'ent between it and FillaluG is not a suret.ship agree'ent in the sense that petitioner has beco'e an additional debtor in relation to private respondents" 0t is 'erel. waiving its right of e
" " " [C]ounterbonds posted to obtain the lifting of a writ of attach'ent is due to these bonds being securit. for the pa.'ent of an. (udg'ent that the attaching part. 'a. obtain8 the. are thus 'ere replace'ents of the propert. for'erl. attached, and (ust as the latter 'a. be levied upon after final (udg'ent in the case in order to realiGe the a'ount ad(udged, so is the liabilit. of the countersureties ascertainable after the (udg'ent has beco'e final" " " " 0n $mperial $nsurance, $nc. v. %e "os !ngeles ,[%+] we ruled " " " =ection 17, #ule -7 of the #ules of Court cannot be construed that an Le
'erel. waives its right of e
aforesaid standing in place of the propert. so released" =hould such counterbond for an. reason be found to be or beco'e insufficient, and the part. furnishing the sa'e fail to file an additional counterbond, the attaching part. 'a. appl. for a new order of attach'ent" 0t should be noted that in !"#" $o" 16&14, per our #esolution dated 1- anuar. 1997,[44] we per'itted FillaluG to file a counterattach'ent bond" On 17 ;ebruar. 1997,[4-] we reuired the private respondents to co''ent on the sufficienc. of the counterbond posted b. FillaluG" 0t is uite palpable that the necessar. steps in the discharge of an attach'ent upon giving counterbond have been ta/en" To reuire a specific order for the discharge of the attach'ent when this Court, in our decision in !"#" $o" 16&14, had alread. declared that the petitioner is solidaril. bound with FillaluG would be 'ere surplusage" Thus uring the pendenc. of this petition, a counterattach'ent bond was filed b. petitioner FillaluG before this Court to discharge the attach'ent earlier issued b. the trial court" =aid bond a'ounting to &"- 'illion was furnished b. =ecurit. acific Assurance, Corp" which agreed to bind itself L(ointl. and severall.L with petitioner for Lan. (udg'entL that 'a. be recovered b. private respondent against the for'er"[4]
etitionerMs argu'ent that the 'ere filing of a counterbond in this case cannot auto'aticall. discharge the attach'ent without first an order of discharge and approval of the bond, is la'e"
2e are not un'indful of our ruling in the case of &elisle $nvestment and 'inance Co., $nc. v. State $nvestment (ouse, $nc. ,[47] where we held
Bnder the #ules, there are two :&3 wa.s to secure the discharge of an attach'ent" ;irst, the part. whose propert. has been attached or a person appearing on his behalf 'a. post a securit." =econd, said part. 'a. show that the order of attach'ent was i'properl. or irregularl. issued"[4&] The first applies in the instant case" =ection 1&, #ule -7,[4%] provides
" " " [T]he Court of Appeals correctl. ruled that the 'ere posting of a counterbond does not auto'aticall. discharge the writ of attach'ent" 0t is onl. after hearing and after the (udge has ordered the discharge of the attach'ent if a cash deposit is 'ade or a counterbond is e
SEC. 12. %ischarge of attachment upon giving counter-bond.
The ruling in *elisle, at first glance, would suggest an error in the assailed ruling of the Court of Appeals because there was no specific resolution discharging the attach'ent and approving the counterbond" As abovee
After a writ of attach'ent has been enforced, the part. whose propert. has been attached, or the person appearing on his behalf, 'a. 'ove for the discharge of the attach'ent wholl. or in part on the securit. given" The court shall, after due notice and hearing, order the discharge of the attach'ent if the 'ovant 'a/es a cash deposit, or files a counterbond e
On this score, we hew to the pertinent ratiocination of the Court of Appeals as regards the heretofore cited provision of =ection 1&, #ule -7 of the 1997 #ules of Civil rocedure, on the discharge of attach'ent upon giving counterbond " " " The filing of the counterattach'ent bond b. petitioner FillaluG has discharged the attach'ent on the properties and 'ade the petitioner corporation liable on the counterattach'ent bond" This can be gleaned fro' the L@;@$A$TM= *O$ ;O# T@ 0==O?BT0O$ O; ATTAC)@$TL, which states that =ecurit. acific Assurance Corporation, as suret., in consideration of the dissolution of the said
attachment jointly and severally , binds itself with petitioner FillaluG for an. (udg'ent that 'a. be recovered b. private respondent AnGures against petitioner FillaluG"
respondent agupan @lectric Corporation :@CO#3, on the other hand, was the grantee of a franchise to operate and 'aintain electric services in the province of angasinan, including agupan Cit."
The contract of suret. is onl. between petitioner FillaluG and petitioner corporation" The petitioner corporation cannot escape liabilit. b. stating that a court approval is needed before it can be 'ade liable" This defense can onl. be availed b. petitioner corporation against petitioner FillaluG but not against third persons who are not parties to the contract of suret." The petitioners hold the'selves out as (ointl. and severall. liable without an. conditions in the counterattach'ent bond" T>e
On ;ebruar. &, 197+, )cAO#@ and @CO# entered into a contract whereb. @CO# shall provide electric power to )cAO#@s otel" uring the ter' of their contract for power service, @CO# noticed discrepancies between the actual 'onthl. billings and the esti'ated 'onthl. billings of )cAO#@" Bpon inspection, it was discovered that the ter'inal in the transfor'ers connected to the 'eter had been interchanged resulting in the slow rotation of the 'eter" Conseuentl., @CO# issued a corrected bill but )cAO#@ refused to pa." As a result of )cAO#@s failure and continued refusal to pa. the corrected electric bills, @CO# disconnected power suppl. to the hotel on $ove'ber &7, 197+"
$e%&%&o"er cor$or!%&o" c!""o% &m$o'e reB&'&%e' beore &% c!" be m!#e 5&!b5e >e" %>e 5! c5e!r53 #oe' "o% reB&re 'c> reB&'&%e' %o be 5&55e# "
[4+] :@'phases supplied"3 Feril., a (udg'ent 'ust be read in its entiret., and it 'ust be construed as a whole so as to bring all of its parts into har'on. as far as this can be done b. fair and reasonable interpretation and so as to give effect to ever. word and part, if possible, and to effectuate the intention and purpose of the Court, consistent with the provisions of the organic law"[49] 0nsurance co'panies are prone to invent e
Aggrieved, )cAO#@ co''enced a suit against @CO# for da'ages with pra.er for a writ of preli'inar. in(unction" )cAO#@ posted in(unction bonds fro' several sureties, one of which was herein petitioner A#A)OB$T, which issued an in(unction bond on ul. 7, 19+6 with a face a'ount of -66,666"66" Accordingl., a writ of preli'inar. in(unction was issued wherein @CO# was ordered to continue suppl.ing electric power to the hotel and restrained fro' further disconnecting it"
:)ERE*ORE,
After due hearing, the #egional Trial Court of ueGon Cit., *ranch 16, rendered (udg'ent in favor of @CO#, the dispositive portion of which reads
SO ORDERED.
2@#@;O#@, there being preponderance of evidence, the court hereb. dis'isses the a'ended co'plaint" ;urther, the court rescinds the service contract between the parties, and orders )cAdore to pa. ecorp the following
in view of all the foregoing, the ecision and #esolution of the Court of Appeals dated 1 une &666 and && August &666, respectivel., are both A**RMED " Costs against petitioner"
6. [G.R. No. 110086. <53 1, 1] +ARAMOUNT NSURANCE COR+ORATON, $e%&%&o"er, ('. COURT O* A++EALS !"# DAGU+AN ELECTRC COR+ORATON, re'$o"#e"%'. DECSON YNARESSANTAGO, J .
*efore this Court is a petition for review on certiorari assailing the ecision of the Court of Appeals dated April %6, 199% in CA!"#" CF $o" 11976 which dis'issed petitioner ara'ount 0nsurance Corporations :A#A)OB$T3 appeal, thereb. affir'ing the decision of the court a )uo finding petitioner liable on its in(unction bond" )cAdore ;inance and 0nvest'ent, 0nc" :)cAO#@3 was the owner and operator of the )cAdore 0nternational alace otel in agupan Cit." rivate
1" Actual da'ages consisting of total arrearages for electric services rendered fro' ;ebruar. 197+ to anuar. 19+%, in the su' of %,+%4,4+9"&, plus interest at the legal rate, co'puted fro' the date of de'and until full pa.'ent8 &" )oral da'ages in the su' of 66,666"668 %" @
6666+ b. =entinel 0nsurance Co'pan., 0nc" for 166,666"66 and -6,666"668 and $o" 1&1% b. the Travelers )ulti0nde'nit. Corporation for &&-,666"66"
?0A*?@ 20T )cAO#@ TO T@ @DT@$T O; 0T= *O$, 20C @C0=0O$ 0= $OT =BO#T@ *E T@ @F0@$C@"[%]
ursuant to the dispositive portion of this decision, the court holds that these bonding co'panies are (ointl. and severall. liable with )cAdore, to the e
A#A)OB$T asserts that :t3he bone of contention in the instant case is the 'atter of evidence :or lac/ thereof3 presented b. private respondent during the hearing of the case a uo, notice :or lac/ thereof3 to the suret. relative to the proceedings before the court a uoduring which said evidence was presented, as well as the actual proceedings the'selves" [4] A#A)OB$T further asseverates that no evidence relative to da'ages suffered b. private respondent as a result of the in(unction was ever presented, or that if an. such evidence was presented, the sa'e was done without notice to petitioner and in violation of its right to due process"[-] )oreover, petitioner 'aintains that the in(unction bond was issued and approved so'eti'e in April 19+6 to guarantee actual and 'aterial da'ages as 'a. be sustained and dul. proved b. private respondent" Thus, it can onl. cover the period prospectivel. fro' the date of its issuance and does not retroact to the date of the initial controvers."
=end this decision to plaintiffs counsel Att." agapong8 defendants counsel Att." Fera CruG8 and to each of the bonds'an" 0t is so ordered"[1] )cAO#@ did not appeal the above decision" A#A)OB$T, however, appealed to the Court of Appeals assigning the following errors, to wit 0" A@??A$T =B#@TE 2A= $OT !#A$T@ B@ #OC@== $O# !0F@$ 0T= AE 0$ COB#T" 00" A@??A$T= =B#@TE *O$, *@0$! A$ 0$B$CT0O$ O# T@)O#A#E #@=T#A0$0$! O#@# *O$, T@ )A$ATO#E #OC@B#@ 0$ =@C" &6, #B?@ -7, 0$ #@?AT0O$ TO =@C" 9, #B?@ -+, #B?@= O; COB#T 2A= $OT O*=@#F@ 0$ T0= CA=@8 000" $O @F0@$C@ $O# #OO; A *@@$ #@=@$T@ TO =O2 TAT @#@0$ A@??A$T =B#@TE *O$ =OB? *@ @? ?0A*?@ ;O# TOTA? A)A!@= A= AB!@ 0$ T@ CA??@$!@ @C0=0O$" [&] 0n essence, A#A)OB$T contended that it was not given its da. in court because it was not notified b. @CO# of its intention to present evidence of da'ages against its in(unction bond, as 'andated b. =ec" 9 of #ule -+, in relation to =ec" &6 of #ule -7 of the #evised #ules of Court"
0n its Co''ent, @CO# clai's that A#A)OB$T participated in the proceedings and was given its da. in court" This is evidenced b. the $otice of earing dated ;ebruar. &, 19+- addressed to the three sureties" 0n fact, at the hearing on )arch &&, 19+-, A#A)OB$T was in attendance represented b. Att." $onito " Cordero" ?i/ewise, A#A)OB$T was notified of the ne
The Court of Appeals was not convinced with petitioners contentions" On April %6, 199%, it affir'ed the decision of the trial court" 0n the instant petition, A#A)OB$T see/s to reverse and set aside the decision of the Court of Appeals on the following assign'ent of errors ;0#=T?E, T@ O$O#A*?@ COB#T O; A@A?= @##@ 0$ #B?0$! TAT $OT0C@ TO @T0T0O$@# A$ 0T= #@=@$C@ T#OB! COB$=@? 0$ O$@ @A#0$! 2@#@ $O @F0@$C@ 0$ =BO#T O; T@ A)A!@= !BA#A$T@@ *E @T0T0O$@#= *O$ #@$@#= T@ $@@ ;O# A$OT@# @A#0$! O$ TAT )ATT@# A =B@#;?B0TE" =@CO$?E, T@ O$O#A*?@ COB#T O; A@A?= @##@ 0$ A;;0#)0$! T@ @C0=0O$ O; T@ COB#T A BO TAT @T0T0O$@# 0= O0$T?E A$ =@F@#A??E
etitioners sub'issions necessitates going into the nature of an in(unction as well as over the procedure in clai'ing, ascertaining and awarding da'ages upon the in(unction bond" 0n(unction is an e
preli'inar. 'andator. in(unction"[7] 0ts sole purpose is not to correct a wrong of t he past, in the sense of redress for in(ur. alread. sustained, but to prevent further in(ur."[+] A preli'inar. in(unction or te'porar. restraining order 'a. be granted onl. when, a'ong others, the applicant, unless e
The above rule co'es into pla. when the plaintiffapplicant for in(unction fails to sustain his action, and the defendant is thereb. granted the right to proceed against the bond posted b. the for'er" 0n the case at bench, the trial court dis'issed )cAO#@s action for da'ages with pra.er for writ of preli'inar. in(unction and eventuall. ad(udged the pa.'ent of actual, 'oral, and e
proceed against the in(unction bond posted b. plaintiffapplicant to recover the da'ages occasioned b. the issuance b. the trial court of the writ of in(unction" 0n order for the in(unction bond to beco'e answerable for the abovedescribed da'ages, the following reuisites 'ust concur [11] 1" The application for da'ages 'ust be filed in the sa'e case where the bond was issued8 &" =uch application for da'ages 'ust be filed before the entr. of (udg'ent8 and %" After hearing with notice to the suret." The records of this case reveal that during its pendenc. in the trial court, @CO# filed its Answer raising co'pulsor. counterclai's for rescission of contract, 'oral da'ages, e
'anifested its desire to cancel its bond, it should have as/ed for a defer'ent of hearing on @CO#s evidence but A#A)OB$T did not do an.thing of this sort" Onl. when an adverse (udg'ent was rendered b. the trial court against its principal )cAdore did it whi'per a denial of procedural due process" [1-] On the sa'e point, A#A)OB$T argues that contrar. to the ruling of the Court of Appeals, there is a need for a separate hearing for the purpose of presenting evidence on the alleged da'ages clai'ed b. @CO# on petitioners in(unction bond" A#A)OB$T contends that a separate hearing is needed as no evidence dealing with @CO#s clai' for da'ages on petitioners bond was presented during the hearing wherein petitioners counsel attended nor in the ne
The e
This Court does not agree" #ule -+, =ection 4:b3, provides that a bond is e
*e that as it 'a., a scrutin. of petitioners 0nde'nit. Agree'ent[&1] with )cAO#@ shows that the for'er agreed to beco'e suret. for the stated a'ount in favor of agupan @lectric Corp" 0t should be noted that )cAO#@ was alread. in arrears starting fro' une 1979[&&] up to the ti'e it entered into an 0nde'nit. Agree'ent with A#A)OB$T on ul. 17, 19+6" 0t 'a. not be a'iss to point out that b. the contract of suret.ship, it is not for the obligee to see to it that the principal pa.s the debt or fulfills the contract, but for the suret. to see to it that the principal pa. or perfor'" [&%] The purpose of the in(unction bond is to protect the defendant against loss or da'age b. reason of the
in(unction in case the court finall. decides that the plaintiff was not entitled to it, and the bond is usuall. conditioned accordingl." Thus, the bonds'en are obligated to account to the defendant in the in(unction suit for all da'ages, or costs and reasonable counsels fees, incurred or sustained b. the latter in case it is deter'ined that the in(unction was wrongfull. issued"[&4] The posting of a bond in connection with a preli'inar. in(unction :or attach'ent under #ule -7, or receivership under #ule -9, or seiGure or deliver. of personal propert. under #ule 63 does not operate to relieve the part. obtaining an in(unction fro' an. and all responsibilit. for the da'ages that t he writ 'a. thereb. cause" 0t 'erel. gives additional protection to the part. against who' the in(unction is directed" 0t gives the latter a right of recourse against either the applicant or his suret., or against both" [&-] 0n the sa'e 'anner, when petitioner A#A)OB$T issued the bond in favor of its principal, it undertoo/ to assu'e all the da'ages that 'a. be suffered after finding that the principal is not entitled to the relief being sought" :)ERE*ORE, based on the foregoing, the instant petition is @$0@" The decision of the Court of Appeals dated April %6, 199% in CA!"#" CF $o" 11976 is A;;0#)@" 2ith costs" SO ORDERED. 7. G.R. No. L6698
M!3 1, 11
+)L++NE NATONAL -AN, petitioner,
vs"
)ON. GREGORO G. +NEDA, &" >&' c!$!c&%3 !' +re'&#&"? <#?e o %>e Cor% o *&r'% "'%!"ce o R&!5, -r!"c> HH !"# TAYA-AS CEMENT COM+ANY, NC., respondents"
The Chief "egal Counsel for petitioner. +rtille "a +ffice for private respondent. *ERNAN, C.J.:
0n this petition for certiorari , petitioner hilippine $ational *an/ :$*3 see/s to annul and set aside the orders dated )arch 4, 1977 and )a. %1, 1977 rendered in Civil Case $o" &44&& 1 of the Court of ;irst 0nstance of #iGal, *ranch DD0, respectivel. granting private respondent Ta.abas Ce'ent Co'pan., 0nc"Ms application for a writ of preli'inar. in(unction to en(oin t he foreclosure sale of certain properties in ueGon Cit. and $egros Occidental and den.ing petitionerMs 'otion for reconsideration thereof" 0n 19%, 0gnacio Arro.o, 'arried to ?ourdes Tuason Arro.o :the Arro.o =pouses3, obtained a loan of -+6,666"66 fro' petitioner ban/ to purchase 65 of the subscribed capital stoc/, and thereb. acuire the controlling interest of private respondent Ta.abas Ce'ent Co'pan., 0nc" :TCC3" & As securit. for said loan, the
spouses Arro.o e
On =epte'ber 1&, 197-, Acting Cler/ of Court and @<Officio =heriff iana ?" ungca issued a resolution finding that the uestions raised b. the parties reuired the reception and evaluation of evidence, hence, proper for ad(udication b. the courts of law" =ince said uestions were pre(udicial to the holding of the foreclosure sale, she ruled that her LOffice, therefore, cannot properl. proceed with the foreclosure sale unless and until there be a court ruling on the afore'entioned issues"L + Thus, in )a., 197, $* filed with the Court of ;irst 0nstance of ueGon Cit., *ranch F a petition for mandamus 9against said iana ungca in her capacit. as Cit. =heriff of ueGon Cit. to co'pel her to proceed with the foreclosure sale of the 'ortgaged properties covered b. TCT $o" --%&% in order to satisf. both the personal obligation of the spouses Arro.o as well as their liabilities as sureties of TCC" 16 On =epte'ber , 197, the petition was granted and ungca was directed to proceed with the foreclosure sale of the 'ortgaged properties covered b. TCT $o" --%&% pursuant to Act $o" %1%- and to issue the corresponding =heriffMs Certificate of =ale" 11 *efore the decision could attain finalit., TCC filed on =epte'ber 14, 197 before the Court of ;irst 0nstance of #iGal, asig, *ranch DD0 a co'plaint 1& against $*, ungca, and the rovincial =heriff of $egros Occidental and @<Officio =heriff of *acolod Cit. see/ing, inter alia, the issuance of a writ of preli'inar. in(unction to restrain the foreclosure of the 'ortgages over the ?a Fista propert. and acienda *acon as well as a declaration that its obligation with $* had been full. paid b. reason of the latterMs repossession of the i'ported 'achiner. and euip'ent" 1% On October -, 197, the C;0, thru respondent udge !regorio ineda, issued a restraining order 14 and on )arch 4, 1977, granted a writ of preli'inar. in(unction" 1- $*Ms 'otion for reconsideration was denied, hence this petition" etitioner $* advances four grounds for the setting aside of the writ of preli'inar. in(unction, na'el. a3 that it contravenes "" $o" %+- which prohibits the issuance of a restraining order against a govern'ent financial institution in an. action ta/en b. such institution in co'pliance with the 'andator. foreclosure provided in =ection 1 thereof8 b3 that the writ counter'ands a final decision of a coeual and coordinate court8 c3 that the writ see/s to prohibit the perfor'ance of acts be.ond the courtMs territorial (urisdiction8 and, d3 private respondent TCC has not shown an. clear legal right or necessit. to the relief of preli'inar. in(unction" rivate respondent TCC counters with the argu'ent that "" $o" %+- does not appl. to the case at bar, firstl. because no foreclosure proceedings have been instituted against it b. $* and secondl., because its account under the ?IC has been full. satisfied with the repossession of the i'ported 'achiner. and euip'ent b. $*" The resolution of the instant controvers. lies pri'aril. on t he uestion of whether or not TCCMs liabilit. has been e
2e rule for the petitioner $*" 0t 'ust be re'e'bered that $* too/ possession of the i'ported ce'ent plant 'achiner. and euip'ent pursuant to the trust receipt agree'ent e
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A trust receipt, therefore, is a securit. agree'ent, pursuant to which a ban/ acuires a Lsecurit. interestL in the goods"/phi 0t secures an indebtedness and there can be no such thing as securit. interest that secures no obligation" As defined in our laws :h3 L=ecurit. interestL 'eans a propert. interest in goods, docu'ents or instru'ents to secure perfor'ance of so'e obligations of the entrustee or of so'e third persons to the entruster and includes title, whether or not e
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Contrar. to the allegation of the F0$TO?A=, 0*AA did not beco'e the real owner of the goods" 0t was 'erel. the holder of a securit. title for the advances it had 'ade to the F0$TO?A=" The goods the F0$TO?A= had purchased through 0*AA financing re'ain their own propert. and the. hold it at their own ris/" The trust receipt arrange'ent did not convert the 0*AA into an investor8 the latter re'ained a lender and creditor" <<<
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=ince the 0*AA is not the factual owner of t he goods, the F0$TO?A= cannot (ustifiabl. clai' that because the. have surrendered the goods to 0*AA and subseuentl. deposited the' in the custod. of the court, the. are
absolutel. relieved of their obligation to pa. their loan because of their inabilit. to dispose of the goods" The fact that the. were unable to sell the seashells in uestion does not affect 0*AAMs right to recover the advances it had 'ade under the ?etter of Credit" $*Ms possession of the sub(ect 'achiner. and euip'ent being precisel. as a for' of securit. for the advances given to TCC under the ?etter of Credit, said possession b. itself cannot be considered pa.'ent of the loan secured thereb." a.'ent would legall. result onl. after $* had foreclosed on said securities, sold the sa'e and applied the proceeds thereof to TCCMs loan obligation" )ere possession does not a'ount to foreclosure for foreclosure denotes the procedure adopted b. the 'ortgagee to ter'inate the rights of the 'ortgagor on the propert. and includes the sale itself" 1+ $either can said repossession a'ount to dacion en pago " ation in pa.'ent ta/es place when propert. is alienated to the creditor in satisfaction of a debt in 'one. and the sa'e is governed b. sales" 19 ation in pa.'ent is the deliver. and trans'ission of ownership of a thing b. the debtor to the creditor as an accepted euivalent of the perfor'ance of the obligation" &6 As aforesaid, the repossession of the 'achiner. and euip'ent in uestion was 'erel. to secure the pa.'ent of TCCMs loan obligation and not for the purpose of transferring ownership thereof to $* in satisfaction of said loan" Thus, no dacion en pago was ever acco'plished" roceeding fro' this finding, $* has the right to foreclose the 'ortgages e
(udg'ent, including all incidents relative to the control and conduct of its 'inisterial officers, na'el. the sheriff thereof" &- The foreclosure sale having been ordered b. *ranch F of the C;0 of #iGal, TCC should not have filed in(unction proceedings with *ranch DD0 of the sa'e C;0, but instead should have first sought relief b. proper 'otion and application fro' the for'er court which had e
$A#FA=A, " Application of the established rule in this (urisdiction, that the acuittal of an accused on reasonable doubt is not generall. an i'pedi'ent to the i'position, in the sa'e cri'inal action, of civil liabilit. for da'ages on said accused, is what is essentiall. called into uestion b. the appellant in this case" The infor'ation which initiated the instant cri'inal proceedings in the Court of ;irst 0nstance of #iGal indicted three :%3 persons ?t" #iGalino )" Bba., )rs" )ilagros a'intuan, and )rs" ulia T" )aniego for the cri'e of )A?F@#=AT0O$ co''itted as follows LThat on or about the period covering the 'onth of )a., 19-7 up to and including the 'onth of August, 19-7, in ueGon Cit., hilippines, the abovena'ed accused, conspiring together, confederating with and helping one another, with intent of gain and without authorit. of law, did, then and there, wilfull., unlawfull. and feloniousl. 'alverse, 'isappropriate and 'isappl. public funds in the a'ount of ,4%4"-6 belonging to the #epublic of the hilippines, in the following 'anner, to wit the accused, ?t" #0A?0$O )" Bba., a dul. appointed officer in the Ar'ed ;orces of the hilippines in active dut., who, during the period specified above, was designated as isbursing Officer in the Officer of the Chief of ;inance, !, Ca'p )urph., ueGon
Cit., and as such was entrusted with and had under his custod. and control public funds, conspiring and confederating with his coaccused, )0?A!#O= T" A)0$TBA$ and B?0A T" )A$0@!O, did then and there, unlawfull., willfull. and feloniousl., with intent of gain and without authorit. of law, and in pursuance of their conspirac., ta/e, receive, and accept fro' his said coaccused several personal chec/s drawn against the hilippine $ational *an/ and the *an/ of the hilippine 0slands, of which the accused, )0?A!#O= T" A)0$TBA$ is the drawer and the accused, B?0A T" )A$0@!O, is the indorser, in the total a'ount of ,4%4"-6, cashing said chec/s and using for this purpose the public funds entrusted to and placed under the custod. and control of the said ?t" #iGalino )" Bba., all the said accused /nowing full. well that the said chec/s are worthless and are not covered b. funds in the afore'entioned ban/s, for which reason the sa'e were dishonored and re(ected b. the said ban/s when presented for encash'ent, to the da'age and pre(udice of the #epublic of the hilippines, in the a'ount of ,4%4"-6, hilippine currenc."L 1 Onl. ?t" Bba. and )rs" )aniego were arraigned, )rs" a'intuan having apparentl. fled to the Bnited =tates in August, 19&" & *oth Bba. and )aniego entered a plea of not guilt." % After trial (udg'ent was rendered b. the Court of ;irst 0nstance, 4 the dispositive part whereof reads LThere being sufficient evidence be.ond reasonable doubt against the accused, #iGalino )" Bba., the Court hereb. convicts hi' of the cri'e of 'alversation and sentences hi' to suffer the penalt. of reclusion te'poral of T2@?F@ :1&3 E@A#=, O$@ :13 AE to ;OB#T@@$ :143 E@A#=, @0!T :+3 )O$T=, and a fine of -7,4%4"-6 which is the a'ount 'alversed, and to suffer perpetual special disualification" L0n the absence of evidence against accused ulia T" )aniego, the Court hereb. acuits her, but both she and #iGal T" Bba. are hereb. ordered to pa. (ointl. and severall. the a'ount of -7,4%4"-6 to the govern'ent"L )aniego sought reconsideration of the (udg'ent, pra.ing that she be absolved fro' civil liabilit. or, at the ver. least, that her liabilit. be reduced to 4,9%4"-6" The Court declined to negate her civil liabilit., but did reduce the a'ount thereof to 4,9%4"-6" 7 =he appealed to the Court of Appeals + as Bba. had earlier done" 9 Bba.Ms appeal was subseuentl. dis'issed b. the Appellate Court because of his failure to file brief" 16 On the other hand, )aniego sub'itted her brief in due course, and ascribed three :%3 errors to the Court a uo, to wit 13 The ?ower Court erred in holding her civill. liable to inde'nif. the !overn'ent for the value of the chec/s after she had been found not guilt. of the cri'e out of which the civil liabilit. arises" &3 @ven assu'ing arguendo that she could properl. be held civill. liable after her acuittal, it was error for the lower Court to ad(udge her liable as an indorser to
inde'nif. the govern'ent for the a'ount of the chec/s" %3 The ?ower Court erred in declaring her civill. liable (ointl. and severall. with her codefendant Bba., instead of absolving her altogether" 11 *ecause, in the Appellate CourtMs view, )aniegoMs brief raised onl. uestions of law, her appeal was later certified to this Court pursuant to =ection 17, in relation to =ection %1, of the udiciar. Act, as a'ended, and =ection %, #ule -6 of the #ules of Court" 1& The verdict 'ust go against the appellant" 2ell /nown is the principle that Lan. person cri'inall. liable for felon. is also civill. liable"L 1% *ut a person ad(udged not cri'inall. responsible 'a. still be held to be civill. liable" A personMs acuittal of a cri'e on the ground that his guilt has not been proven be.ond reasonable doubt 14 does not bar a civil action for da'ages founded on the sa'e acts involved in the offense" 1- L@
to its tenor, and that if it be dishonored, and the necessar. proceedings on dishonor be dul. ta/en, he will pa. the a'ount thereof to the holder, or to an. subseuent indorser who 'a. be co'pelled to pa. it"L &6 )aniego 'a. also be dee'ed an Lacco''odation part.L in the light of the facts, i"e", a person Lwho has signed the instru'ent as 'a/er, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his na'e to so'e other person"L &1 As such, she is under the law Lliable on the instru'ent to a holder for value, notwithstanding such holder at the ti'e of ta/ing the instru'ent /new " " " :her3 to be onl. an acco''odation part.,L && although she has the right, after pa.ing the holder, to obtain rei'burse'ent fro' the part. acco''odated, Lsince the relation between the' is in effect that of principal and suret., the acco''odation part. being the suret."L &% One last word" The Trial Court acted correctl. in ad(udging )aniego to be civill. liable in the sa'e cri'inal action in which she had been acuitted of the felon. of )alversation ascribed to her, dispensing with the necessit. of having a separate civil action subseuentl. instituted against her for the purpose" &4 2@#@;O#@, the (udg'ent of the Trial Court, being entirel. in accord with the facts and the law, is hereb. affir'ed in toto, with costs against the appellant" =O O#@#@" 9" TO2@#= A==B#A$C@ CO#O#AT0O$, petitioner, vs" O#O#A)A =B@#)A#T, 0T= O2$@##O#0@TO#, =@@ O$! and B!@ *@$A)0$ H" !O#O=@, residing udge, Court of ;irst 0nstance of )isa'is Oriental, *ranch 0, respondents" !"#" $o" ?4-+4+ K 19771169 @C0=0O $ AB0$O, This case is about the liabilit. of a suret. in a counterbond for the lifting of a writ of preli'inar. attach'ent"
On )arch &4, 197 the Ong spouses filed an answer with a counterclai'" ;or non appearance at the pretrial, the Ong spouses were declared in default" On October &-, 197, the lower court rendered a decision, ordering not onl. the Ong spouses but also their suret., Towers Assurance Corporation, to pa. solidaril. to =ee ong the su' of -+,466" The court also ordered the Ong spouses to pa. 16,666 as litigation e
On ;ebruar. 17, 197 =ee ong, the proprietor of Orora'a =uper'art in Caga.an de Oro Cit., sued the spouses @rnesto Ong and Conching Ong in the Court of ;irst 0nstance of )isa'is Oriental for the collection of the su' of -+,466 plus litigation e
*ut certainl., the suret. is entitled to be, heard before an e =uret. Co", 0nc" vs" on" iccio, 16- hil" 119&, 1&668 ?uGon =uret. Co", 0nc" vs" *eson, ?&+-, anuar. %6, 1976, %1 =C#A %1%3
=ee ong as/ed for a writ of preli'inar. attach'ent" On )arch -, 197, the lower court issued an order of attach'ent" The deput. sheriff attached the properties of the Ong spouses in Falencia, *u/idnon and in Caga.an de Oro Cit."
2@#@;O#@, the order and writ of e
To lift the attach'ent, the Ong spouses filed on )arch 11, 197 a counterbond in the a'ount of -+,466 with Towers Assurance Corporation as suret." 0n that underta/ing, the Ong spouses and Towers Assurance Corporation bound the'selves to pa. solidaril. to =ee ong the su' of -+,466"
=O O#@#@"
16" 0?00$@ @DO#T A$ ;O#@0!$ ?OA$ !BA#A$T@@ CO#O#AT0O$, petitioner, vs" F"" @B=@*0O CO$=T#BCT0O$, 0$C"8 %?@D 0$T@#$AT0O$A?, 0$C"8 F0C@$T@ " @B=@*0O8 =O?@A C" @B=@*0O8 @BA#O @" =A$TO=8 0?B)0$AA =A$TO=8 A$ ;0#=T 0$T@!#AT@ *O$0$! A$ 0$=B#A$C@ CO)A$E, 0$C", respondents" !"#" $o" 146647 K &664671% @C0=0O $ AF0@, #", C"" This case is an offshoot of a service contract entered into b. a ;ilipino construction fir' with the 0rai !overn'ent for the construction of the 0nstitute of h.sical Therap.)edical Center, hase 00, in *aghdad, 0ra, at a ti'e when the 0ran0ra war was ongoing" 0n a co'plaint filed with the #egional Trial Court of )a/ati Cit., doc/eted as Civil Case $o" 91196 and assigned to *ranch -+, petitioner hilippine @
etitioner hilguarantee approved respondentsM application" =ubseuentl., letters of guarantee[+] were issued b. hilguarantee to the #afidain *an/ of *aghdad covering 1665 of the perfor'ance and advance pa.'ent bonds, but the. were not accepted b. =O*" 2hat =O* reuired was a letterguarantee fro' #afidain *an/, the govern'ent ban/ of 0ra" #afidain *an/ then issued a perfor'ance bond in favor of =O* on the condition that another foreign ban/, not hilguarantee, would issue a counterguarantee to cover its e
euip'ent and 'aterials" 'aterials"[&&] [&&] On & October 19+, Al Ahli *an/ of Huwait sent a tele< call to the petitioner de'anding full pa.'ent of its perfor'ance bond counterguarantee" Bpon receiving a cop. of that tele< 'essage on &7 October 19+, respondent F@C0 reuested 0ra Trade and @cono'ic evelop'ent )inister )oha''ad ;adhi ussein to recall the tele< call on the perfor'ance guarantee for being a drastic action in contravention contraventio n of its 'utual agree'ent with the latter that :13 the i'position of penalt. would be held in abe.ance until the co'pletion of the pro(ect8 and :&3 the ti'e e
After due trial, the trial court ruled against hilguarantee and held that the latter had no valid cause of action against the respondents" 0t opined that at the ti'e the call was 'ade on the guarantee which was e
00 @T0T0O$@# CA$$OT C?A0) =B*#O!AT0O$" 000 0T 0= 0$0B0TOB= A$ B$B=T ;O# @T0T0O$@# TO O? #@=O$@$T= ?0A*?@ B$@# T@0# @@ O; B$@#TAH0$!"[%] The 'ain issue in this case is whether the petitioner is entitled to rei'burse' rei'burse'ent ent of what it paid under ?etter of !uarantee $o" +1194; it issued to Al Ahli *an/ of Huwait based on the deed of underta/ing and suret. bond fro' the respondents" The petitioner asserts that since the guarantee it issued was absolute, unconditional, and irrevocable irrevocable the nature and e
guarantee, we hereb. unconditionall. and irrevocabl. guarantee, under our #ef" $o" ?!+1194 ; to pa. .ou on .our first written or tele< de'and 0ra inars Two undred =event. One Thousand @ight undred @ight and fils si< hundred ten :0&71,+6+I163 representing 1665 of the perfor'ance bond reuired of F"" @B=@*0O for the construction of the h.sical Therap. 0nstitute, hase 00, *aghdad, 0ra, plus interest and other incidental e
$o conflicts rule on essential validit. validit. of contracts is e
4" espite protests fro' the plaintiff, =O* continued pa.ing the acco'plish' acco'plish'ent ent billings of the Contractor purel. in 0rai inars and which pa.'ent ca'e onl. after so'e dela.s" -" =O* is full. aware of the following -"& That laintiff is a foreign contractor in 0ra and as such, would need foreign currenc. :B=U3, to finance the purchase of various euip'ent, 'aterials, 'aterials, supplies, tools and to pa. for the cost of pro(ect 'anage'ent, supervision and s/illed labor not available in 0ra and therefore have to be i'ported and or obtained fro' the hilippiness and other sources outside 0ra" hilippine -"% That the )inistr. of ?abor and @'plo.'ent of the hilippines reuires the re'ittance into the hilippines of 765 of the salaries of ;ilipino wor/ers wor/ing abroad in B= ollars8 -"- That the 0 rai inar is not a freel. convertible currenc. such that the sa'e cannot be used to purchase euip'ent, 'aterials, 'aterials, supplies, etc" outside of 0ra8 -" That 'ost of the 'aterials specified b. =O* in the CO$T#ACT are not available in 0ra and therefore have to be i'ported8 -"7 That the govern'ent of 0ra prohibits the bringing of local currenc. :0raui inars3 out of 0ra and hence, i'ported 'aterials, euip'ent, etc", cannot be purchased or obtained using 0raui inars as 'ediu' of acuisition" +" ;ollowing the approved construction progra' of the CO$T#ACT, upon co'pletion of the civil wor/s portion of the installation of euip'ent for the building, should i''ediatel. follow, however, the CO$T#ACT specified that these euip'ent which are to be installed and to for' part of the #O@CT have to be procured outside 0ra since these are not being locall. 'anufactured" Cop. f the relevant portion of the Technical =pecification is hereto attached as Anne< VLCVL and 'ade an integral part hereof8 16" ue to the lac/ of ;oreig ;oreign n currenc. in 0ra for this purpose, and if onl. to assist the 0rai govern'ent in co'pleting the #O@CT, the Contractor without an. obligation on its part to do so but with the /nowledge and consent of =O* and the )inistr. of ousing > Construction of 0ra, offered to arrange on behalf of =O*, a foreign currenc. loan, through the facilities of Circle 0nternational ="A", the ContractorMs =ubcontractor =ubcontractor and =AC@ )@0O C#@0TO which will act as the guarantor for this foreign currenc. loan" Arrange'ents were first 'ade with *anco di #o'a" $egotiation started in une 19+-" =O* is infor'ed of the develop'ents of this negotiation, attached is a cop. of the draft of the loan Agree'ent between =O* as the *orrower and Agent" The =everal *an/s, as ?ender, and counterguaranteed b. 0stituto Centrale er 00 Credito A )edio Ter'ine :)ediocredito3 =eGione =peciale er ?MAssicuraGione el Credito AllM@
with the news clippings are hereto attached as Anne
de'andable of the principal debtor" As found b. the Court of Appeals, the petitioner full. /new that the (oint venture contractor had collectibles fro' =O* which could be set off with the a'ount covered b. the perfor'ance guarantee" 0n ;ebruar. 19+7, the O)@AA trans'itted to the petitioner a cop. of a tele< dated 16 ;ebruar. 19+7 of the hilippine A'bassador in *aghdad, 0ra, infor'ing it of the note verbale sent b. the 0rai )inistr. of ;oreign Affairs stating that the past due obligations of the (oint venture contractor fro' the petitioner would VLbe deducted fro' the dues of the two contractors"VL[4] Also, in the pro(ect situationer attached to the letter to the O)@AA dated & )arch 19+7, the petitioner raised as a'ong the argu'ents to be presented in support of the cancellation of the counterguarantee the fact that the a'ount of 0&+1,414I6 retained b. =O* fro' the ro(ect was 'ore than enough to cover the counterguarantee of 0&71,+6+I168 thus
"1 resent the following argu'ents in cancelling the counterguarantee W The 0rai !overn'ent does not have the foreign e
F@C0 has ta/en ever. possible 'easure for the co'pletion of the pro(ect but the war situation in 0ra particularl. the lac/ of foreign e
obligations
of
pa.ing
7-5
of
progress
billings
in
B=
dollars"
W 0t could also be argued that the a'ount of 0&+1,414I6 retained b. =O* fro' the proposed pro(ect is 'ore than the a'ount of the outstanding counterguarantee" [-] 0n a nutshell, since the petitioner was aware of the contractorMs outstanding receivables fro' =O*, it should have set up co'pensation as was proposed in its pro(ect situationer" )oreover, the petitioner was ver. 'uch aware of the predica'ent of the respondents" 0n fact, in its 1% )a. 19+7 letter to the O)@AA, ;A, )anila, it stated F@C0 also 'aintains that the dela. in the co'pletion of the pro(ect was 'ainl. due to =O*Ms violation of contract ter's and as such, call on the guarantee has no basis" 2hile 0?!BA#A$T@@ is prepared to honor its co''it'ent under the guarantee, 0?!BA#A$T@@ does not want to be an instru'ent in an. case of ineuit. co''itted against a ;ilipino contractor" 0t is for this reason that we are constrained to see/ .our assistance not onl. in ascertaining the veracit. of Al Ahli *an/Ms clai' that it has paid #afidain *an/ but possibl. averting such an event" As an. pa.'ent effected b. the ban/s will co'plicate 'atters, we cannot help underscore the urgenc. of F@C0Ms bid for govern'ent intervention for the a'icable ter'ination of the contract and release of the perfor'ance guarantee" [] *ut surprisingl., though full. cogniGant of =O*Ms violations of the service contract and F@C0Ms outstanding receivables fro' =O*, as well as the situation obtaining in the ro(ect site co'pounded b. the 0ran0ra war, the petitioner opted to pa. the
second la.er guarantor not onl. the full a'ount of the perfor'ance bond counter guarantee but also interests and penalt. charges" This brings us to the ne
$o pronounce'ent as to costs" =O O#@#@"
11" ?0#A! T@DT0?@ )0??=, 0$C" and *A=0?0O ?" ?0#A!, petitioners, vs" =OC0A? =@CB#0TE =E=T@) and O$" AC0;0CO @ CA=T#O, respondents" !"#" $o" ?%%&6- K 19+76+%1 DECSON
;@#$A$, " ;ro' the findings of the Court of Appeals and the trial court, it is clear that the pa.'ent 'ade b. the petitioner guarantor did not in an. wa. benefit the principal debtor, given the pro(ect status and the conditions obtaining at the ro(ect site at that ti'e" )oreover, the respondent contractor was found to have valid defenses against =O*, which are full. supported b. evidence and which have been 'eritoriousl. set up against the pa.ing guarantor, the petitioner in this case" And even if the deed of underta/ing and the suret. bond secured petitionerMs guarant., the petitioner is precluded fro' enforcing the sa'e b. reason of the petitionerMs undue pa.'ent on the guarant." #ights under the deed of underta/ing and the suret. bond do not arise because these contracts depend on the validit. of the enforce'ent of the guarant." The petitioner guarantor should have waited for the natural course of guarant. the debtor F@C0 should have, in the first place, defaulted in its obligation and that the creditor =O* should have first 'ade a de'and fro' the principal debtor" 0t is onl. when the debtor does not or cannot pa., in whole or in part, that the guarantor should pa."[71] 2hen the petitioner guarantor in this case paid against the will of the debtor F@C0, the debtor F@C0 'a. set up against it defenses available against the creditor =O* at the ti'e of pa.'ent" This is the hard lesson that t he petitioner 'ust learn" As the govern'ent ar' in pursuing its ob(ective of providing VLVLhe necessar. support and assistance in order to enable VL [;ilipino e
This is an appeal b. certiorari involving purel. uestions of law fro' the decision rendered b. respondent (udge in Civil Case $o" 1&&7- entitled L=ocial =ecurit. =.ste' versus ?irag Te
166,666"66 ;ebruar. 14, 19 166,666"66 ;ebruar. 14, 197 166,666"66 ;ebruar. 14, 19+ 166,666"66 ;ebruar. 14, 199 1%9 166,666"66 ul. %, 19 166,666"66 ul. %, 197 166,666"66 ul. %, 19+ 166,666"66 ul. %, 199 166,666"66 ul. %, 1976 L-" That to guarantee the rede'ption of the stoc/s purchased b. the plaintiff, the pa.'ent of dividends, as well as the other obligations of the ?irag Te
L1&" That the failure of the ?irag Te
;or failure of ?irag Te
%" #espondent (udge erred in sentencing petitioners to pa. 14,466"66 in liuidated da'ages8 4" #espondent (udge erred in sentencing petitioners to pa. 16,666"66 b. wa. of attorne.Ms fees8 -" #espondent (udge erred in sentencing petitioners to pa. interest fro' the ti'e of filing the co'plaint up to the ti'e of full pa.'ent both on the 1,666,666"66 invested b. respondent === in petitionerMs corporation and on the &&6,666"66 which the === clai's as dividends due on its invest'ents8 " #espondent (udge erred in holding that petitioner ?irag is liable to redee' the 1,666,666"66 worth of preferred shares purchased b. respondent === fro' petitioner corporation and the +5 cu'ulative dividend, it appearing that ?irag was 'erel. a suret. and not an insurer of the obligation8 7" #espondent (udge erred in dis'issing the counterclai' of petitioners" The funda'ental issue in this case is whether or not the urchase Agree'ent entered into b. petitioners and respondent === is a debt instru'ent" etitioners clai' that respondent === 'erel. beca'e and still is a preferred stoc/holder of the petitioner corporation, the rede'ption of the shares purchased b. said respondent being dependent upon the financial abilit. of petitioner corporation" etitioner corporation, thus, has no obligation to redee' the preferred stoc/s" On the other hand, respondent === clai's that the urchase Agree'ent is a debt instru'ent, i'posing upon the petitioners the obligation to pa. the a'ount owed, and creating as between the' the relation of creditor and debtor, not that of a stoc/holder and a corporation" 2e uphold the lower courtMs finding that the urchase Agree'ent is, indeed, a debt instru'ent" 0ts ter's and conditions un'ista/abl. show that the parties intended the repurchase of the preferred shares on the respective scheduled dates to be an absolute obligation which does not depend upon the financial abilit. of petitioner corporation" This absolute obligation on the part of petitioner corporation is 'ade 'anifest b. the fact that a suret. was reuired to see to it that the obligation is fulfilled in the event of the principal debtorMs inabilit. to do so" The unconditional underta/ing of petitioner corporation to redee' the preferred shares at the specified dates constitutes a debt which is defined Las an obligation to pa. 'one. at so'e fi
suret." As private respondent rightl. contends, if the parties intended it [===] to be 'erel. a stoc/holder of petitioner corporation, it would have been sufficient that referred Certificates $os" 1&+ and 1%9 were issued in its na'e as the preferred certificates contained all the rights of a stoc/holder as well as certain obligations on the part of petitioner corporation" owever, the parties did in fact e
Thus, it follows that petitioner *asilio ?" ?irag cannot den. liabilit. for petitioner corporationMs default" As suret., *asilio ?" ?irag is bound i''ediatel. to pa. respondent === the a'ount then outstanding" LThe obligation of a suret. differs fro' that of a guarantor in that the suret. insures the debt, whereas the guarantor 'erel. insures solvenc. of the debtor8 and the suret. underta/es to pa. if the principal does not pa., whereas a guarantor 'erel. binds itself to pa. if the principal is unable to pa."L On the liabilit. of petitioners to pa. +5 cu'ulative dividend, 2e agree with the observation of the lower court that the dividends stipulated b. the parties served evidentl. as interests" The a'ount thereof was fi
=O O#@#@"
Art" &647" *. guarant. a person, called the guarantor, binds hi'self to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so"
1&" A$TO$0O !A#C0A, #", petitioner, vs" COB#T O; A@A?=, ?A=A?
0f a person binds hi'self solidaril. with the principal debtor, the provisions of =ection 4, Chapter %, Title 0 of this *oo/ shall be observed" 0n such case the contract is called a suret.ship"
@F@?O)@$T CO#O#AT0O$, respondents" !"#" $o" +6&61 K 199611&6 DECSON
C#B, " On April 1-, 1977, the 2estern )inolco Corporation :2)C3 obtained fro' the hilippine 0nvest'ents =.ste's OrganiGation :0=O3 two loans for &,-66,666"66 and 1,666,666"66 for which it issued the corresponding pro'issor. notes pa.able on )a. %6, 1977" On the sa'e date, Antonio !arcia and @rnest Hahn e
Art" 1&&&" A solidar. debtor 'a., in action filed b. the creditor, avail hi'self of all defenses which are derived fro' the nature of the obligation and of those which are personal to hi', or pertain to his own share" 2ith respect to those which personall. belong to the others, he 'a. avail hi'self thereof onl. as regards that part of the debt for which the latter are responsible" The point is not well ta/en in view of the nature and purpose of a suret. agree'ent" =uret.ship is a contractual relation resulting fro' an agree'ent whereb. one person, the suret., engages to be answerable for the debt, default or 'iscarriage of another, /nown as the principal" The suret.Ms obligation is not an original and direct one for the perfor'ance of his own act, but 'erel. accessor. or collateral to the obligation contracted b. the principal" $evertheless, although the contract of a suret. is in essence secondar. onl. to a valid principal obligation, his liabilit. to the creditor or pro'isee of the principal is said to be direct, pri'ar. and absolute8 1 in other words, he is directl. and euall. bound with the principal" The suret. therefore beco'es liable for the debt or dut. of another although he possesses no direct or personal interest over the obligations nor does he receive an. benefit therefro'" & The peculiar nature of a suret. agree'ent is that it is regarded as valid despite the absence of an. direct consideration received b. the suret. either fro' the principal obligor or fro' the creditor" A contract of suret., li/e an. other contract, 'ust generall. be supported b. a sufficient consideration" owever, the consideration necessar. to support a suret. obligation need not pass directl. to the suret.8 a consideration 'oving to t he principal alone will suffice" 0t has been held that if the deliver. of the original contract is conte'poraneous with the deliver. of the suret.Ms obligation, each contract beco'es co'pleted at the sa'e ti'e, and the consideration which supports the principal contract li/ewise supports the subsidiar. one" % And this is the /ind of suret. contract to which the rule of strict construction applies as opposed to a co'pensated suret. contract underta/en b. suret. corporations which are organiGed for the purpose of conducting an inde'nit. business at established rates and co'pensation unli/e an ordinar. suret. agree'ent where the suret. binds his na'e through 'otives of friendship and acco'odation" 4
0t follows fro' the above principles that ?asal would not be un(ustl. enriched if the petitioner were to be held liable for the obligation contracted b. 2)C" The creditor would onl. be recovering the a'ount of its loan plus its incre'ents" The petitioner, for his part, can still go against 2)C for the a'ount he 'a. have to pa. ?asal as assignee of the 0=O credit"
Art" &679" An e
#egarding the petitionerMs clai' that he is liable onl. as a corporate officer of 2)C, the suret. agree'ent shows that he signed the sa'e not in representation of 2)C or as its president but in his personal capacit." e is therefore personall. bound" There is no law that prohibits a corporate officer fro' binding hi'self personall. to answer for a corporate debt" 2hile the li'ited liabilit. doctrine is intended to protect the stoc/holder b. i''uniGing hi' fro' personal liabilit. for the corporate debts, he 'a. nevertheless divest hi'self of this protection b. voluntaril. binding hi'self to the pa.'ent of the corporate debts" The petitioner cannot therefore ta/e refuge in this doctrine that he has b. his own acts effectivel. waived" Concerning the issue of novation, we note first the following provisions of the 'e'orandu' of agree'ent supposedl. entered into b. 2)C and its creditors which the petitioner argues had the effect of releasing hi' fro' the suret. agree'ent 0F" #elease of == The C#@0TO#= e
The sureties e Cia" 7 0n the said cases, the respective sureties clai'ed that since the creditor changed the rate of interest in the principal obligation without their /nowledge or consent, the. were relieved fro' liabilit. under their contract" 0t was held, however, that the change in the rate of interest was 'erel. a collateral agree'ent between the creditor ban/ and the principal debtor that did not affect the suret." 2hen the debtor pro'ised to pa. the e
alterations do not have that effect" 0t is a
effect, what * did was 'erel. to restructure its credit with 2)C and 'a/e additional acco''odations in the for' of invest'ents on preferred and co''on shares of stoc/ of 2)C" 0t was clearl. an effort to assist 2)C perfor' its obligations with its creditors" *ut not 'ore than that" Concerning the pro'issor. notes supposedl. issued b. $C to the creditors of 2)C and with the full and unconditional guarant. of the hilippine !overn'ent as contained in Anne< -, suffice it to repeat that such Anne< - :'e'orandu' of agree'ent between 2)C and *3, as well as Anne< :addendu' to Anne< -, 'a/ing $OCO)0$, instead of $C as the bu.er3 and Anne< 7 :contract of sale between 2)C and $OCO)0$3, are all not signed b. the contracting parties and therefore have no evidentiar. weight or binding force" 2e approve the following observations 'ade b. the Court of Appeals
The 'ost i'portant argu'ent against the alleged novation is the failure of the petitioner to establish the validit. of the new contract, an essential reuisite for the novation of a previous valid obligation" etitioner insists that the various co''unications 'ade b. 2)C with *, together with the 'e'orandu' of agree'ent :Anne
$ovation of contract cannot be presu'ed" 0n order that an obligation 'a. be e Co" v" Eulo, %4 hil" 97+3" 0t is not proper to consider an obligation novated as in the case at bar b. the 'ere granting of e
1%" 20??@D ?A=T0C 0$B=T#0@=, CO#O#AT0O$, petitioner,
obligation to Atriu' Capital"
vs" O$" COB#T O; A@A?= and 0$T@#$AT0O$A? CO#O#AT@ *A$H, respondents"
On the other hand, 2ille< lastic denied the 'aterial allegations of the co'plaint and interposed the following =pecial Affir'ative efenses
!"#" $o" 16%6 K 19964&-
:a3 Assu'ing arguendo that 'ain defendant is indebted to plaintiff, the for'erMs liabilit. is e
)@$OA, " This is a petition for review on certiorari of the decision 1 of the Court of Appeals in C"A"!"#" CF $o" 19694, affir'ing the decision of the #egional Trial Court of the $ational Capital udicial #egion, *ranch D?F, )anila, which ordered petitioner 2ille< lastic 0ndustries Corporation and the 0nter#esin 0ndustrial Corporation, (ointl. and severall., to pa. private respondent 0nternational Corporate *an/ certain su's of 'one., and the appellate courtMs resolution of October 17, 19+9 den.ing petitionerMs 'otion for reconsideration" The facts are as follows =o'eti'e in 197+, 0nter#esin 0ndustrial Corporation opened a letter of credit with the )anila *an/ing Corporation" To secure pa.'ent of the credit acco'odation, 0nter#esin 0ndustrial and the 0nvest'ent and Bnderwriting Corporation of the hilippines :0BC3 e
:b3 Again, assu'ing arguendo, that the 'ain defendant is indebted to plaintiff, its account is now ver. 'uch lesser than those stated in the co'plaint because of so'e pa.'ents 'ade b. the for'er8 :c3 The co'plaint states no cause of action against 20??@D8 :d3 2???@D is onl. a guarantor of the principal obliger, and thus, its liabilit. is onl. secondar. to that of the principal8 :e3 laintiff failed to e
On April &, 1979, 0nter#esin 0ndustrial, together with 2ille< lastic 0ndustries Corp", e
On April -, 19++, the trial court rendered (udg'ent, ordering 0nter#esin 0ndustrial and 2ille< lastic (ointl. and severall. to pa. to 0nterban/ the following a'ounts
On anuar. 7, 19+1, following de'and upon it, 0BC paid to )anilaban/ the su' of 4,%%4,&+6"1 representing 0nter#esin 0ndustrialMs outstanding obligation" :@
:c3 Attorne.Ms fees and e
On August 11, 19+&, 0nter#esin 0ndustrial paid 0nterban/, which had in turn succeeded Atriu', the su' of +7,66"66 representing the proceeds of its f ire insurance polic. for the destruction of its properties" 0n its answer, 0nter#esin 0ndustrial ad'itted that the LContinuing !uarant.L was intended to secure pa.'ent to Atriu' of the a'ount of 4,%%4,&+6"1 which the latter had paid to )anilaban/" 0t clai'ed, however, that it had alread. full. paid its
:a3 %, 4,7+6"1, representing their indebtedness to the plaintiff, with interest of 175 per annu' fro' August 11, 19+&, when 0nter#esin 0ndustrial paid +7,-66"66 to the plaintiff, until full pa.'ent of the said a'ount8 :b3 ?iuidated da'ages euivalent to 17+ of the a'ount due8 and
0nter#esin 0ndustrial and 2ille< lastic appealed to the Court of Appeals" 2ille< lastic filed its brief, while 0nter#esin 0ndustrial presented a L)otion to Conduct earing and to #eceive @vidence to #esolve ;actual 0ssues and to efer ;iling of the AppellantMs *rief"L After its 'otion was denied, 0nter#esin 0ndustrial did not file its brief an.'ore" On ;ebruar. &&, 1991, the Court of Appeals rendered a decision affir'ing the ruling of the trial court" 2ille< lastic filed a 'otion for reconsideration pra.ing that it be allowed to present evidence to show that 0nter#esin 0ndustrial had alread. paid its obligation to 0nterban/, but its 'otion was denied on ece'ber , 1991
The 'otion is denied for lac/ of 'erit" 2e denied defendantappellant 0nter#esin 0ndustrialMs 'otion for reception of evidence because the situation or situations in which we could e
;or its part 0nterban/ adduced evidence to show that the LContinuing !uarant.L had been 'ade to guarantee pa.'ent of a'ounts 'ade b. it to )anilaban/ and not of an. su's given b. it as loan to 0nter#esin 0ndustrial" 0nterban/Ms witness testified under cross e
purpose of having an additional capital for bu.ing and selling cocoshell charcoal and i'portation of activated carbon, the co'prehensive suret. agree'ent was ad'ittedl. in full force and effect" The loan was, therefore, covered b. the said agree'ent, and private respondent, even if he did not sign the pro'issor. note, is liable b. virtue of the suret. agree'ent" The onl. condition that would 'a/e hi' liable thereunder is that the *orrower Lis or 'a. beco'e liable as 'a/er, endorser, acceptor or otherwise"L There is no doubt that aicor is liable on the pro'issor. note evidencing the indebtedness" The suret. agree'ent which was earlier signed b. @nriue !o, =r" and private respondent, is an accessor. obligation, it being dependent upon a principal one which, in this case is the loan obtained b. aicor as evidenced b. a pro'issor. note" [%] 2ille< lastic contends that the LContinuing !uarant.L cannot be retroactivelt applied so as to secure pa.'ents 'ade b. 0nterban/ under the two LContinuing =uret. Agree'ents"L 2ille< lastic invo/es the ruling in @l Fencedor v" Canlas 11 and iNo v" Court of Appeals 1& in support of its contention that a contract of suret.ship or guarant. should be applied prospectivel." The cases cited are, however, distinguishable fro' the present case" 0n @l Fencedor v" Canlas we held that a contract of suret.ship Lis not retrospective and no liabilit. attaches for defaults occurring before it is entered into unless an intent to be so liable is indicated"L There we found nothing in the contract to show that the paries intended the suret. bonds to answer for the debts contracted previous to the e
benefit of e
presenting an. evidence" Bpon 'otion of 0nter#esin 0ndustrial, however, the trial court reconsidered its order and set the hearing anew on ul. &%, 19+7" *ut 0nter#esin 0ndustrial again 'oved for the postpone'ent of the hearing be postponed to August 11, 19+7" The hearing was, therefore, reset on =epte'ber + and &&, 19+7 but the hearings were reset on October 1%, 19+7, this ti'e upon 'otion of 0nterban/" To give 0nterban/ ti'e to co''ent on a 'otion filed b. 0nter#esin 0ndustrial, the reception of evidence for 0nter#esin 0ndustrial was again reset on $ove'ber 17, & and ece'ber 11, 19+7" owever, 0nter#esin 0ndustrial again 'oved for the postpone'ent of the hearing" Accordingl. the hearing was reset on $ove'ber & and ece'ber 11, 19+7, with warning that the hearings were intransferrable" Again, the reception of evidence for 0nter#esin 0ndustrial was reset on anuar. &&, 19++ and ;ebruar. -, 19++ upon 'otion of its counsel" As 0nter#esin 0ndustrial still failed to present its evidence, it was declared to have waived its evidence" To give 0nter#esin 0ndustrial a last opportunit. to present its evidence, however, the hearing was postponed to )arch 4, 19++" Again 0nter#esin 0ndustrialMs counsel did not appear" The trial court, therefore, finall. declared 0nter#esin 0ndustrial to have waived the right to present its evidence" On the other hand, 2ille< lastic, as before, 'anifested that it was not presenting evidence and reuested instead for ti'e to file a 'e'orandu'" There is therefore no basis for the plea 'ade b. 2ille< lastic that it be given the opportunit. of showing that 0nter#esin 0ndustrial has alread. paid its obligation to 0nterban/" 2@#@;O#@, the decision of the Court of Appeals is A;;0#)@, with costs against the petitioner" =O O#@#@" 14" AC0$TO BE 0$O and $O#*@#TO BE, petitioners, vs" O$" COB#T O; A@A?= and )@T#OO?0TA$ *A$H A$ T#B=T CO)A$E, respondents" !"#" $o" +977- K 199&11& @C0=0O $ AF0@, #", Continuing =uret.ship Agree'ents signed b. the petitioners set off this present controvers." etitioners assail the && une 19+9 ecision of the Court of Appeals in CA!"#" CF $o" 177&9 1 which reversed the & ece'ber 19+7 ecision of *ranch 4- of the #egional Trial Court :#TC3 of )anila in a collection suit entitled L)etropolitan *an/
and Trust Co'pan. vs" B. Tia' doing business under the na'e of MBE T0A) @$T@##0=@= > ;#@0!T =@#F0C@=,M acinto B. iNo and $orberto B.L and doc/eted as Civil Case $o" +&9%6%" The. li/ewise challenge public respondentMs #esolution of &1 August 19+9 & den.ing their 'otion for t he reconsideration of the for'er" The i'pugned decision of the respondent Court su''ariGes the antecedent facts as follows L0t appears that in 1977, B. Tia' @nterprises and ;reight =ervices :hereinafter referred to as BT@;=3, thru its representative B. Tia', applied for and obtained credit acco''odations :letter of credit and trust receipt acco''odations3 fro' the )etropolitan *an/ and Trust Co'pan. :hereinafter referred to as )@T#O*A$H3 in the su' of 766,666"66 :Original #ecords, p" %%%3" To secure the afore'entioned credit acco''odations, $orberto B. and acinto B. iNo e
owever, BT@;= did not acuiesce to the obligator. stipulations in the trust receipt" As a conseuence, )@T#O*A$H sent letters to the said principal obligor and its sureties, $orberto B. and acinto B. iNo, de'anding pa.'ent of the a'ount due" 0nfor'ed of the a'ount due, BT@;= 'ade partial pa.'ents to the *an/ which were accepted b. the latter" Answering one of the de'and letters, iNo, thru counsel, denied his liabilit. for the a'ount de'anded and reuested )@T#O*A$H to send hi' copies of docu'ents showing the source of his liabilit." 0n its repl., the ban/ infor'ed hi' that the source of his liabilit. is the Continuing =uret.ship which he e
)eanwhile, the resolution of the aforecited 'otion to dis'iss was held in abe.ance pending the introduction of evidence b. the parties as per order dated ;ebruar. &1, 19+ :0bid", p" 713" aving been granted a period of fifteen :1-3 da.s fro' receipt of the order dated )arch 7, 19+ within which to file the answer, suretiesdefendants filed their responsive pleading which 'erel. rehashed the argu'ents in their 'otion to dis'iss and 'aintained that the. are entitled to the benefit of e
contract with the plaintiff" On the contrar., iNo and B. categoricall. testified that the. signed the blan/ for's in the office of B. Tia' at &% Asuncion =treet, *inondo, )anila, in obedience to the instruction of B. Tia', their for'er e'plo.er" The. denied having gone to the office of the p laintiff to subscribe to the docu'ents :October 1, 19+7, tsn, pp" -7, 148 October 1-, 19+7, tsn, pp" %+, 1%13" :#ecords, pp" %%%%%43"ML %
fro' ul. 1+, 19+7 until the whole 'onetar. obligation is paid8 and
<<< <<< <<<
=O O#@#@"L
0n its ecision, the trial court decreed as follows
0n ruling for the herein private respondent :hereinafter )@T#O*A$H3, public respondent held that the Continuing =uret.ship Agree'ents separatel. e
L#@)0=@= CO$=0@#@, (udg'ent is hereb. rendered Ma3 dis'issing the CO)?A0$T against AC0$TO BE 0PQMO and $O#*@#TO BE8 Mb3 ordering the plaintiff to pa. to iNo and B. the a'ount of ,666"66 as attorne.Ms fees and e
%3 Ordering suretiesappellees acinto B. iNo and $orberto B. to pa., (ointl. and severall., to plaintiff &6,666"66 as attorne.Ms fees" 2ith costs against appellees"
etitioners filed a 'otion to reconsider the foregoing ecision" The. uestioned the public respondentMs construction of the suret.ship agree'ents and its ruling with respect to the e
that the Continuing =uret.ship Agree'ents still subsisted and thereb. also secured the 1979 obligations incurred b. B. Tia', the. cannot be held liable for 'ore than what the. guaranteed to pa. because it is a
:hereinafter called the M*orrowerM3, for the pa.'ent of which the =B#@TE is now obligated to the *A$H, either as guarantor or otherwise, andIor in order to induce the *A$H, in its discretion, at an. ti'e or fro' ti'e to ti'e hereafter, to 'a/e loans or advances or to e
his obligation, he is bound, and no farther" 17 The foregoing stipulations uneuivocall. reveal that the suret.ship agree'ents in the case at bar are continuing in nature" etitioners do not den. this8 in fact, the. candidl. ad'itted it" $either have the. denied the fact that the. had not revo/ed the suret.ship agree'ents" Accordingl., as correctl. held b. the public respondent LBndoubtedl., the purpose of the e
0ndeed, the Continuing =uret.ship Agree'ents signed b. petitioner iNo and petitioner B. fi< the aggregate a'ount of their liabilit., at an. given ti'e, at +66,666"66 and %66,666"66, respectivel." The law is clear that a guarantor 'a. bind hi'self for less, but not for 'ore than the principal debtor, both as regards the a'ount and the onerous nature of the conditions" 1+ 0n the case at bar, both agree'ents provide for liabilit. for interest and e
<<< <<< <<< The. further provide that 2hen the 0rrevocable ?etter of Credit $o" =$?oc%69 was obtained fro' appellant ban/, for the purpose of obtaining goods :covered b. a trust receipt3 fro' lanters roducts, the continuing suret.ships were in full force and effect" ence, even if suretiesappellees did not sign the MCo''ercial ?etter of Credit and Application, the. are still liable as the credit acco''odation :letter of creditItrust receipt3 was covered b. the said suret.ships" 2hat 'a/es the' liable thereunder is the condition which provides that the *orrower Mis or 'a. beco'e liable as 'a/er, endorser, acceptor or otherwise"M And since BT@;= which :sic3 was liable as principal obligor for having failed to fulfill the obligator. stipulations in the trust receipt, the. as insurers of its obligation, are liable thereunder"L 1 etitioners 'aintain, however, that their Continuing =uret.ship Agree'ents cannot be 'ade applicable to the 1979 obligation because the latter was not .et in e
L0n the event of (udicial proceedings being instituted b. the *A$H against the =B#@TE to enforce an. of the ter's and conditions of this underta/ing, the =B#@TE further agrees to pa. the *A$H a reasonable co'pensation for and as attorne.Ms fees and costs of collection, which shall not in an. event be less than ten per cent :1653 of the a'ount due :the sa'e to be due and pa.able irrespective of whether the case is settled (udiciall. or e 0nsurance Co", 0nc" vs" "?" !alang )achiner. Co", 0nc", && this Court held Letitioner ob(ects to the pa.'ent of interest and attorne.Ms fees because :13 the. were not 'entioned in the bond8 and :&3 the suret. would beco'e liable for 'ore than the a'ount stated in the contract of suret.ship"
<<< <<< <<< The ob(ection has to be overruled, because as far bac/ as the .ear 19&& this Court held in Tagawa vs" Aldanese, 4% hil" +-&, that creditors suing on a suret.ship bond 'a. recover fro' the suret. as part of their da'ages, interest at the legal rate even if the suret. would thereb. beco'e liable to pa. 'ore than the total a'ount stipulated in the bond" MThe theor. is that interest is allowed onl. b. wa. of da'ages for dela. upon the part of the sureties in 'a/ing pa.'ent after the. should have done so" 0n so'e states, the interest has been charged fro' the date of the (udg'ent of the appellate court" 0n this (urisdiction, we rather prefer to follow the general practice, which is to order that interest begin to run fro' the date when the co'plaint was filed in court, " " " "M =uch theor. aligned with sec" -16 of the Code of Civil rocedure which was subseuentl. recogniGed in the #ules of Court :#ule -%, section 3 and with Article 116+ of the Civil Code :now Art" &&69 of the $ew Civil Code3" 0n other words the suret. is 'ade to pa. interest, not b. reason of the contract, but b. reason of its failure to pa. when de'anded and for having co'pelled the plaintiff to resort to the courts to obtain pa.'ent" 0t should be observed that interest does not run fro' the ti'e the obligation beca'e due, but fro' the filing of the co'plaint" As to attorne.Ms fees" *efore the enact'ent of the $ew Civil Code, successful litigants could not recover attorne.Ms fees as part of the da'ages the. suffered b. reason of the litigation" @ven if the part. paid thousands of pesos to his law.ers, he could not charge the a'ount to his opponent :Tan Ti vs" Alvear, & hil" -3" owever the $ew Civil Code per'its recover. of attorne.Ms fees in eleven cases enu'erated in Article &&6+, a'ong the', Mwhere the court dee's it (ust and euitable that attorne.Ms :sic3 fees and e
outstanding obligation in the su' of &,%97,++%"+ :as of ul. 17, 19+73 -1,69&"+& representing the principal a'ount, +&-,1%%"-4, for past due interest :-%1+& to 717+73 and 9&1,-7"%&, for penalt. charges at 1&5 per annu' :- %1+& to 717+73 as shown in the =tate'ent of Account :@ ;#@0!T =@#F0C@= under 0rrevocable ?etter of Credit $o" =$?oc%69, dated %6 )arch 1979, together with the interest due thereon at the legal rate co''encing fro' the date of the filing of the co'plaint in Civil Case $o" +&9%6% with *ranch 4- of the #egional Trial Court of )anila, as well as the ad(udged attorne.Ms fees and costs" All other dispositions in the dispositive portion of the challenged decision not inconsistent with the above are affir'ed" =O O#@#@"
1-" ATOH ;0$A$C@ CO#O#AT0O$, petitioner, vs" COB#T O; A@A?=, =A$EB C@)0CA? CO#O#AT0O$, A$0?O @" A##0@TA, $@$0TA *" A##0@TA, A*?0TO *@#)B$O and ?@OO?O A?0?0, respondents" !"#" $o" +667+ K 199%6-1+ @C0=0O$ ;@?0C0A$O, " Ato/ ;inance Corporation :LAto/ ;inanceL3 as/s us to review and set aside the
ecision of the Court of Appeals which reversed a decision of the trial court ordering private respondents to pa. (ointl. and severall. to petitioner Ato/ ;inance certain su's of 'one." On &7 ul. 1979, private respondents =an.u Che'ical Corporation :L=an.u Che'icalL3 as principal and =an.u Trading Corporation :L=an.u TradingL3 along with individual private stoc/holders of =an.u Che'ical, na'el., private respondents spouses anilo @" Arrieta and $enita *" Arrieta, ?eopoldo !" alili and ablito *er'undo as sureties, e
=uret." $o lien or right of setoff shall be dee'ed to have been waived b. an. act, o'ission or conduct on the part of the Creditor, or b. an. neglect to e
:d3 $o assigned Contract is represented b. an. note or other evidence of indebtedness or other securit. docu'ent e
clai' upon the ground that such clai' had prescribed under Article 1&9 of the Civil Code and for lac/ of cause of action" The private respondents contended that the Continuing =uret.ship Agree'ent, being an accessor. contract, was null and void since, at the ti'e of its e
:g3 The debtorIs under the assigned ContractIs are solvent and hisIitsItheir failure to pa. the assigned Contracts andIor an. install'ent thereon upon 'aturit. thereof shall be conclusivel. considered as a violation of this warrant.8 and
LACCO#0$!?E, (udg'ent is hereb. rendered in favor of the plaintiff ATOH ;0$A$C@ CO#O#AT0O$8 and against the defendants =A$EB C@)0CA? CO#O#AT0O$, A$0?O @" A##0@TA, $@$0TA *" A##0@TA, A*?0TO *@#)B$O and ?@OO?O A?0?0, ordering the said defendants, (ointl. and severall., to pa. the plaintiff
:h3 @ach assigned Contract is a valid obligation of the bu.er of the 'erchandise andIor service rendered under the Contract and that no Contract is overdue"
:13 1&6,&46"66 plus 6"6% for each peso for each 'onth fro' =epte'ber 1, 19+% until the whole a'ount is full. paid8
The foregoing warranties and representations are in addition to those provided for in the $egotiable 0nstru'ents ?aw and other applicable laws" An. violation thereof shall render the A==0!$O# i''ediatel. and unconditionall. liable to pa. the A==0!$@@ (ointl. and severall. with the debtors under the assigned contracts, the a'ounts due thereon"
:&3 -,666"66 as attorne.Ms fees8 and
<<< <<< <<<
rivate respondents went on appeal before the then 0nter'ediate Appellate Court :L0ACL3, and the appeal was there doc/eted as AC!"#" $o" 6766-CF" The case was raffled to the Third Civil Cases ivision of the 0AC" 0n a resolution dated &1 )arch 19+, that ivision dis'issed the appeal upon the ground of abandon'ent, since the private respondents had failed to file their appeal brief notwithstanding receipt of the notice to do so" On 4 une 19+, entr. of (udg'ent was 'ade b. the Cler/ of Court of the 0AC" Accordingl., Ato/ ;inance went before the trial court and sought a writ of e
4" The A==0!$O# shall without co'pensation or cost, collect and receive in trust for the A==0!$@@ all pa.'ents 'ade upon the assigned contracts and shall re'it to the A==0!$@@ all collections on the said Contracts as follows -,4-6"66 due on anuar. &, 19+& on ever. 1-th da. :se'i'onthl.3 until $ove'ber 1, 19+&" 116,--6"66 balloon pa.'ent after 1& 'onths"L % :@'phases supplied3 ?ater, additional trade receivables were assigned b. =an.u Che'ical to Ato/ ;inance with a total face value of 166,%7+"4-" On 1% anuar. 19+4, Ato/ ;inance co''enced action against =an.u Che'ical, the Arrieta spouses, ablito *er'undo and ?eopoldo alili before the #egional Trial Court of )anila to collect the su' of 1&6,&46"66 plus penalt. charges a'ounting to 6"6% for ever. peso due and pa.able for each 'onth starting fro' 1 =epte'ber 19+%" Ato/ ;inance alleged that =an.u Che'ical had failed to collect and re'it the a'ounts due under the trade receivables" =an.u Che'ical and the individual private respondents sought dis'issal of Ato/Ms
:%3 To pa. the costs" =O O#@#@"L 4
owever, on &7 August 19+, private respondents filed a etition for #elief fro' udg'ent before the Court of Appeals" This etition was raffled off to the 1-th ivision of the Court of Appeals" 0n that etition, private respondents clai'ed that their failure to file their appeal brief was due to e
The 1-th ivision of the Court of Appeals nonetheless granted the etition for #elief fro' udg'ent Lin the para'ount interest of (ustice,L 7 set aside the resolution of the Third Civil Cases ivision of the then 0AC, and gave private respondents a non e
the sa'e ti'e, nothing in this decision should be read as i'pliedl. holding that a petition for relief fro' (udg'ent is available in respect of a decision rendered b. the Court of Appeals8 this issue is best reserved for deter'ination in so'e future case where it shall have been adeuatel. argued b. the parties" 2e turn, therefore, to a consideration of the first substantive issue addressed b. the Court of Appeals in rendering its ecision on the 'erits of the appeal whether the individual private respondents 'a. be held solidaril. liable with =an.u Che'ical under the provisions of the Continuing =uret.ship Agree'ent, or whether that Agree'ent 'ust be held null and void as having been e Co", -% O"!" ++%8 and, Arran v" )anila ;idelit. > =uret. Co", -% O"!" 7&47" 2e find 'erit in this contention"
L:13 that it had erred in ruling that a continuing suret.ship agree'ent cannot be effected to secure future debts8 :&3 that it had erred in ruling that the continuing suret.ship agree'ent was null and void for lac/ of consideration without an. evidence whatsoever [being] adduced b. private respondents8 :%3 that it had erred in granting the etition for #elief fro' udg'ent while e
Although obligations arising fro' contracts have the force of law between the contracting parties, :Article 11-9 of the Civil Code3 this does not 'ean that the law is inferior to it8 the ter's of the contract could not be enforced if not valid" =o, even if, as in this case, t he agree'ent was for a continuing suret.ship to include obligations enu'erated in paragraph & of the agree'ent, the sa'e could not be enforced" ;irst, because this contract, (ust li/e guarant., cannot e
and literal 'anner and carried to the li'it of its logic" This is clear fro' Article &6-& of the Civil Code itself
)oreover, Article &6-% of the Civil Code states
LThe suret. agree'ent which was earlier signed b. @nriue !o", =r" and private respondent, is an accessor. obligation, it being dependent upon a principal one which, in this case is the loan obtained b. aicor as evidenced b. a pro'issor. note" 2hat obviousl. induced petitioner ban/ to grant the loan was the suret. agree'ent whereb. !o and Chua bound the'selves solidaril. to guarant. the punctual pa.'ent of the loan at 'aturit." *. ter's that are uneuivocal, it can be clearl. seen that the suret. agree'ent was e
LArt" &6-%" A guarant. 'a. also be given as securit. for future debts, the a'ount of which is not .et /nown8 there can be no clai' against the guarantor until the debt is liuidated" A conditional obligation 'a. also be secured"L :@'phasis supplied3
MArticle &6-%" A guarantee 'a. also be given as securit. for future debts, the a'ount of which is not .et /nown8 there can be no clai' against the guarantor until the debt is liuidated" A conditional obligation 'a. also be secured"ML 1% :@'phasis supplied3
The Court of Appeals apparentl. overloo/ed our caselaw interpreting Articles &6-& and &6-% of the Civil Code" 0n $ational #ice and Corn Corporation :$A#0C3 v" ose A" ;o(as and Alto =uret. Co", 0nc", 11 the private respondents assailed the decision of the trial court holding the' liable under certain suret. bonds filed b. private respondent ;o(as and issued b. private respondent Alto =uret. Co" in favor of petitioner $A#0C, upon the ground that those suret. bonds were null and void Lthere being no principal obligation to be secured b. said bonds"L 0n affir'ing the decision of the trial court, this Court, spea/ing through )r" ustice "*"?" #e.es, 'ade short shrift of the private respondentsM doctrinaire argu'ent
0t is clear to us that the #iGal Co''ercial *an/ing Corporation and the $A#0C cases re(ected the distinction which the Court of Appeals in the case at bar sought to 'a/e with respect to Article &6-%, that is, that the Lfuture debtsL referred to in that Article relate to Ldebts alread. e
LArt" &6-&" A guarant. cannot e
LBnder his third assign'ent of error, appellant ;o(as uestions the validit. of the additional bonds :@
Co'prehensive or continuing suret. agree'ents are in fact uite co''onplace in present da. financial and co''ercial practice" A ban/ or a financing co'pan. which anticipates entering into a series of credit transactions with a particular co'pan., co''onl. reuires the pro(ected principal debtor to e
on Article 1&9 of the Civil Code which reads as follows
warrant. period"
LArt" 1&9" 0n case the assignor in good faith should have 'ade hi'self responsible for the solvenc. of the debtor, and the contracting parties should not have agreed upon the duration of the liabilit., it shall last for one .ear onl., fro' the ti'e of the assign'ent if the period had alread. e
0n effect, therefore, co'pan.appellant was right when it clai'ed that appellee had no cause of action against it or had lost its cause of action"L 1- :@'phasis supplied3
0f the credit should be pa.able within a ter' or period which has not .et e
Once again, however, we consider that the Court of Appeals was in reversible error in so concluding" The relevant provision of the eed of Assign'ent 'a. be uoted again in this connection L&" To induce the A==0!$@@ [Ato/ ;inance] to purchase the above contracts, the A==0!$O# [=an.u Che'ical] does hereb. certif., warrant and represent that " " " " :g3 the debtorIs under the assigned contractIs are solvent and hisIitsItheir failure to pa. the assigned contractIs andIor an. install'ent thereon upon 'aturit. thereof shall be conclusivel. considered as a violation of this warrant.8 and " " " "
:&3 if no period :or length of ti'e3 was agreed upon, then
The foregoing warranties and representations are in addition to those provided for in the $egotiable 0nstru'ents ?aw and other applicable laws" An. violation thereof shall render the A==0!$O# i''ediatel. and unconditionall. liable to pa. the A==0!$@@ (ointl. and severall. with the debtors under the assigned contracts, the a'ounts due thereon"
:a3 one .ear fro' assign'ent if debt was due at the ti'e of the assign'ent
<<< <<< <<<
:b3 one .ear fro' 'aturit. if debt was not .et due at the ti'e of the assign'ent"
:@'phases supplied3
:13 if there is a period :or length of ti'e3 agreed upon, then, for such period8
The debt referred to in this law is the debt under the assigned contract or the original debts in favor of the assignor which were later assigned to the assignee" The debt alluded to in the law, is not the debt incurred b. the assignor to the assignee as contended b. the appellant" Appl.ing the said law to the case at bar, the records disclose that none of the assigned receivables had 'atured on $ove'ber &7, 19+1 when the eed of Assign'ent was e
0t 'a. be stressed as a preli'inar. 'atter that the eed of Assign'ent was valid and binding upon =an.u Che'ical" Assign'ent of receivables is a co''onplace co''ercial transaction toda." 0t is an activit. or operation that per'its the assignee to 'onetiGe or realiGe the value of the receivables before the 'aturit. thereof" 0n other words, =an.u Che'ical received fro' Ato/ ;inance the value of its trade receivables it had assigned8 =an.u Che'ical obviousl. benefitted fro' the assign'ent" The pa.'ents due in the first instance fro' the trade debtors of =an.u Che'ical would represent the return of the invest'ent which Ato/ ;inance had 'ade when it paid =an.u Che'ical the transfer value of such receivables" Article 1&9 of the Civil Code invo/ed b. private respondents and accepted b. the Court of Appeals is not, in the case at bar, 'aterial" The liabilit. of =an.u Che'ical to Ato/ ;inance rests not on the breach of the warrant. of solvenc.8 the liabilit. of =an.u Che'ical was not e< lege :e< Article 1&93 but rather e< contractu" Bnder the eed of Assign'ent, the effect of nonpa.'ent b. the original trade debtors was a breach of warrant. of solvenc. b. =an.u Che'ical, resulting in turn in the assu'ption of solidar. liabilit. b. the assignor under the receivables assigned" 0n other words, the assignor =an.u Che'ical beco'es a solidar. debtor under the ter's of the receivables covered and transferred b. virtue of the eed of Assign'ent" And because assignor =an.u Che'ical beca'e, under the ter's of the eed of Assign'ent, solidar. obligor under each of the assigned receivables, the other private respondents :the Arrieta spouses, ablito *er'undo and ?eopoldo
alili3, beca'e solidaril. liable for that obligation of =an.u Che'ical, b. virtue of the operation of the Continuing =uret.ship Agree'ent" ut a little differentl., the obligations of individual private respondent officers and stoc/holders of =an.u Che'ical under the Continuing =uret.ship Agree'ent, were activated b. the resulting obligations of =an.u Che'ical as solidar. obligor under each of the assigned receivables b. virtue of the operation of the eed of Assign'ent" That solidar. liabilit. of =an.u Che'ical is not sub(ect to the li'iting period set out in Article 1&9 of the Civil Code" 0t follows that at the ti'e the original co'plaint was filed b. Ato/ ;inance in the trial court, it had a valid and enforceable cause of action against =an.u Che'ical and the other private respondents" 2e also agree with the Court of Appeals that the original obligors under the receivables assigned to Ato/ ;inance re'ain liable under the ter's of such receivables" 2@#@;O#@, for all the foregoing, the etition for #eview is hereb. !#A$T@ B@ COB#=@, and the ecision of the Court of Appeals dated 1+ August 19+7 and its #esolution dated %6 =epte'ber 19+7 are hereb. #@F@#=@ and =@T A=0@" A new (udg'ent is hereb. entered #@0$=TAT0$! the ecision of the trial court in Civil Case $o" +4&&19+ dated 1 April 19+-, e
1" *A ;0$A$C@ CO#O#AT0O$, petitioner, vs" O$" COB#T O; A@A?= and T#A@#= #OEA? *A$H, respondents" !"#" $o" 94- K 199&676% @C0=0O $ )@0A?@A, " This is a petition for review on certiorari of the decision of the respondent appellate court which reversed the ruling of t he trial court dis'issing the case against petitioner" The antecedent facts are as follows On ece'ber 17, 19+6, #enato !a.tano, doing business under the na'e !ebbs 0nternational, applied for and was granted a loan with respondent Traders #o.al *an/ in the a'ount of 6,666"66" As securit. for the pa.'ent of said loan, the
!a.tano spouses e
ban/ charges as of =epte'ber &&, 19+7, plus interests, penalties and ban/ charges thereafter until the whole obligation shall have been full. paid" L&3 Attorne.Ms fees at t he stipulated rate of ten :1653 percent co'puted fro' t he total obligation8 and L%3 The costs of suit" LThe dis'issal of the case against defendant *A ;inance Corporation is hereb. ordered without pronounce'ent as to cost" L=O O#@#@"L :p" %1, #ollo3 $ot satisfied with the decision, respondent ban/ appealed with the Court of Appeals" On )arch 1%, 1996, respondent appellate court rendered (udg'ent 'odif.ing the decision of the trial court as follows L0n view of the foregoing, the (udg'ent is hereb. rendered ordering the defendants !a.tano spouses and alternative defendant *A ;inance Corporation, (ointl. and severall., to pa. the plaintiff the a'ount of +-,+67"&- as of =epte'ber +, 19+7, including interests, penalties and other bac/ :sic3 charges thereon, until the full obligation shall have been full. paid" $o pronounce'ent as to costs"
corporation be.ond the scope of his authorit. since the petitioner itself is not even e'powered b. its articles of incorporation and b.laws to issue guaranties" etitioner also sub'its that it is not guilt. of estoppel to 'a/e it liable under the letterguarant. because petitioner had no /nowledge or notice of such letter guarant.8 that the allegation of hilip 2ong, credit ad'inistrator, that there was an audit was not supported b. evidence of an. audit report or record of such transaction in the office files" 2e find the petitionerMs contentions 'eritorious" 0t is a settled rule that persons dealing with an assu'ed agent, whether the assu'ed agenc. be a general or special one are bound at their peril, if the. would hold the principal liable, to ascertain not onl. the fact of agenc. but also the nature and e
L=O O#@#@"L :p" &7, #ollo3 ence this petition was filed with the petitioner assigning the following errors co''itted b. respondent appellate court L1" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ #B?0$! TAT @T0T0O$@# 0= O0$T?E A$ =@F@#A??E ?0A*?@ 20T !AETA$O =OB=@= @=0T@ 0T= ;0$0$!= TAT T@ ?@TT@# !BA#A$TE :@D" MCM3 0= Y0$FA?0 AT 0T= 0$C@T0O$M8 L&" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ #B?0$! TAT T@ @T0T0O$@# 2A= !B0?TE O; @=TO@? @=0T@ T@ ;ACT TAT 0T $@F@# H$@2 O; =BC A??@!@ ?@TT@#!BA#A$TE8 L%" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ $OT #B?0$! TAT =BC ?@TT@# !BA#A$TE :@D0*0T YCY3 *@0$! AT@$T?E B?T#A F0#@=, 0= B$@$;O#C@A*?@8 L4" T@ O$O#A*?@ COB#T O; A@A?= @##@ 0$ $OT A2A#0$! #@?0@; O$ @T0T0O$@#M= COB$T@#C?A0) :p" 16, #ollo3"L
To hilip " 2ong, =A) Credit Ad'inistrator" ;ro' ospicio *" *a.ona, r", F and ead of Credit Ad'inistration" #e ?ending Authorit." 0 a' pleased to delegate to .ou in .our capacit. as Credit Ad'inistrator the following lending li'its a3 -6,666"66 =ecured ?oans b3 --6,666"66 =upported ?oans c3 %-6,666"66 Truc/ ?oansIContractsI?eases d3 %-6,666"66 Auto ?oan ContractsI?eases e3 %-6,666"66 Appliance ?oan Contracts f3 %-6,666"66 Bnsecured ?oans" Total loans andIor credits [co'bination of :a3 thru :f3 e
=ince the issues are interrelated, it would be well to discuss the' (ointl." All loans 'ust be within the Co'pan.Ms established lending guideline and policies" etitioner contends that the letter guarant. is ultra vires, and therefore unenforceable8 that said letterguarant. was issued b. an e'plo.ee of petitioner
<<< <<< <<<
?@F@?= O; A#OFA?" All transactions in e
of estoppel in allowing its credit ad'inistrator to act as though the latter had power to guarantee" ACCO#0$!?E, the petition is !#A$T@ and the assailed decision of the respondent appellate court dated )arch 1%, 1996 is hereb. #@F@#=@ and =@T A=0@ and another one is rendered dis'issing the co'plaint for su' of 'one. against *A ;inance Corporation"
<<< <<< <<< =O O#@#@" :pp" &%, #ollo3 :@'phasis ours3 Although 2ong was clearl. authoriGed to approve loans even up to ;%-6,666"66 without an. securit. reuire'ent, which is far above the a'ount sub(ect of the guarant. in the a'ount of 6,666"66, nothing in the said 'e'orandu' e
17" O=@ C" TBA 0F and @T#O$0?A C" TBA, etitioners, versus T@ COB#T O; A@A?= and *A$H O; T@ 0?00$@ 0=?A$=, #espondents" !"#" $o" 14--7+ K &66-111+ DECSON
CAR+O, <. T>e C!'e
This is a petition for review[1] of the ecision[&] of the Court of Appeals dated 7 =epte'ber &666 and its #esolution dated 1+ October &666" The 7 =epte'ber &666 ecision affir'ed the ruling of the #egional Trial Court, )a/ati, *ranch 144 in a case for estafa under =ection 1%, residential ecree $o" 11-" The Court of AppealsM #esolution of 1+ October &666 denied petitionersM 'otion for reconsideration" T>e *!c%'
etitioners ose C" TupaG 0F and etronila C" TupaG :LpetitionersL3 were Fice resident for Operations and FiceresidentITreasurer, respectivel., of @l Oro @ngraver Corporation :L@l Oro CorporationL3" @l Oro Corporation had a contract with the hilippine Ar'. to suppl. the latter with Lsurvival bolos"L To finance the purchase of the raw 'aterials for the survival bolos, petitioners, on behalf of @l Oro Corporation, applied with respondent *an/ of the hilippine 0slands :Lrespondent ban/L3 for two co''ercial letters of credit" The letters of credit were in favor of @l Oro CorporationMs suppliers, Tanchaoco )anufacturing 0ncorporated[%] :LTanchaoco 0ncorporatedL3 and )aresco #ubber and #etreading Corporation[4] :L)aresco CorporationL3" #espondent ban/ granted petitionersM application and issued ?etter of Credit $o" &66+9% for -4,+71"6- to Tanchaoco 0ncorporated and ?etter of Credit $o" &66914- for &94,666 to )aresco Corporation"
=i'ultaneous with the issuance of the letters of credit, petitioners signed trust receipts in favor of respondent ban/" On %6 =epte'ber 19+1, petitioner ose C" TupaG 0F :Lpetitioner ose TupaGL3 signed, in his personal capacit., a trust receipt corresponding to ?etter of Credit $o" &66+9% :for -4,+71"6-3" etitioner ose TupaG bound hi'self to sell the goods covered b. the letter of credit and to re'it the proceeds to respondent ban/, if sold, or to return the goods, if not sold, on or before &9 ece'ber 19+1" On 9 October 19+1, petitioners signed, in their capacities as officers of @l Oro Corporation, a trust receipt corresponding to ?etter of Credit $o" &66914- :for &94,6663" etitioners bound the'selves to sell the goods covered b. that letter of credit and to re'it the proceeds to respondent ban/, if sold, or to return the goods, if not sold, on or before + ece'ber 19+1" After Tanchaoco 0ncorporated and )aresco Corporation delivered the raw 'aterials to @l Oro Corporation, respondent ban/ paid the for'er -4,+71"6- and &94,666, respectivel." etitioners did not co'pl. with their underta/ing under the trust receipts" #espondent ban/ 'ade several de'ands for pa.'ents but @l Oro Corporation 'ade partial pa.'ents onl." On &7 une 19+% and &+ une 19+%, respondent ban/Ms counsel[-] and its representative[] respectivel. sent final de'and letters to @l Oro Corporation" @l Oro Corporation replied that it could not full. pa. its debt because the Ar'ed ;orces of the hilippines had dela.ed pa.ing for the survival bolos" #espondent ban/ charged petitioners with estafa under =ection 1%, residential ecree $o" 11- :L=ection 1%L3[7] or Trust #eceipts ?aw :L 11-L3" After preli'inar. investigation, the then )a/ati ;iscalMs Office found probable cause to indict petitioners" The )a/ati ;iscalMs Office filed the corresponding 0nfor'ations :doc/eted as Cri'inal Case $os" ++4+ and ++493 with the #egional Trial Court, )a/ati, on 17 anuar. 19+4 and the cases were raffled to *ranch 144 :Ltrial courtL3 on &6 anuar. 19+4" etitioners pleaded not guilt. to the charges and trial ensued" uring the trial, respondent ban/ presented evidence on the civil aspect of the cases" T>e R5&"? o %>e Tr &!5 Cor%
On 1 ul. 199&, the trial court rendered (udg'ent acuitting petitioners of estafa on reasonable doubt" owever, the trial court found petitioners solidaril. liable with @l Oro Corporation for the balance of @l Oro CorporationMs principal debt under the trust receipts" The dispositive portion of the trial courtMs ecision provides
outstanding principal obligation of &4,1&9"19 :as of anuar. &%, 199&3 with the stipulated interest at the rate of 1+5 per annu'8 plus 165 of the total a'ount due as attorne.Ms fees8 -,666"66 as ee R5&"? o %>e Cor% o A$$e!5'
0n its ecision of 7 =epte'ber &666, the Court of Appeals affir'ed the trial courtMs ruling" The appellate court held 0t is clear fro' [=ection 1%, 11-] that civil liabilit. arising fro' the violation of the trust receipt agree'ent is distinct fro' the cri'inal liabilit. i'posed therein" 0n the case of intola vs. $nsular &an of !siaand !merica , our =upre'e Court held that acuittal in the estafa case :"" 11-3 is no bar to the institution of a civil action for collection" This is because in such cases, the civil liabilit. of the accused does not ariseex delicto but rather based e< contractu and as such is distinct and independent fro' an. cri'inal proceedings and 'a. proceed regardless of the result of the latter" Thus, an independent civil action to enforce the civil liabilit. 'a. be filed against the corporation aside fro' the cri'inal action against the responsible officers or e'plo.ees" <<<
2@#@;O#@, (udg'ent is hereb. rendered ACB0TT0$! both accused ose C" TupaG, 0F and etronila TupaG based upon reasonable doubt"
[2]e hereb. hold that the acuittal of the accusedappellants fro' the cri'inal charge of estafa did not operate to e
owever, @l Oro @ngraver Corporation, ose C" TupaG, 0F and etronila TupaG, are hereb. ordered, (ointl. and solidaril., to pa. the *an/ of the hilippine 0slands the
Appellants argued that the. cannot be held solidaril. liable with their corporation, @l Oro @ngraver Corporation, alleging that the. e
including the trust receipt agree'ents onl. in their capacit. as such corporate officers" The. said that these instru'ents are 'ere profor'a and that the. e
T>e ''e'
The petition raises these issues :13 2hether petitioners bound the'selves personall. liable for @l Oro CorporationMs debts under the trust receipts8 :&3 0f so :a3 whether petitionersM liabilit. is solidar. with @l Oro Corporation8 and :b3 whether petitionersM acuittal of estafa under =ection 1%, 11- ee R5&"? o %>e Cor%
The petition is partl. 'eritorious" 2e affir' the Court of AppealsM ruling with the 'odification that petitioner ose TupaG is liable as guarantor of @l Oro CorporationMs debt under the trust receipt dated %6 =epte'ber 19+1"
<<< aving contractuall. agreed to hold the'selves solidaril. liable with @l Oro @ngraver Corporation under the sub(ect trust receipt agree'ents with appellee *an/ of the hilippine 0slands, herein accusedappellants 'a. not, therefore, invo/e the separate legal personalit. of the said corporation to evade their civil liabilit. under the letter of credittrust receipt arrange'ent with said appellee, notwithstanding their acuittal in the cri'inal cases filed against the'" The trial court thus did not err in holding the appellants solidaril. liable with @l Oro @ngraver Corporation for the outstanding principal obligation of &4,1&9"19 :as of anuar. &%, 199&3 with the stipulated interest at the rate of 1+5 per annu', plus 165 of the total a'ount due as attorne.Ms fees, -,666"66 as e
On Petitioners' Undertaing Under the !rust "e#eipts
A corporation, being a (uridical entit., 'a. act onl. through its directors, officers, and e'plo.ees" ebts incurred b. these individuals, acting as such corporate agents, are not theirs but the direct liabilit. of the corporation the. represent"[1&] As an e
ence, this petition" etitioners contend that 1" A B!)@$T O; ACB0TTA? O@#AT@[=] TO @DT0$!B0= T@ C0F0? ?0A*0?0TE O; @T0T0O$@#=[8] &" !#A$T0$! 20TOBT A)0TT0$! TAT T@ B@=T0O$@ O*?0!AT0O$ 2A= 0$CB##@ *E T@ CO#O#AT0O$, T@ =A)@ 0= $OT E@T B@ A$ AEA*?@8 %" !#A$T0$! TAT T@ B@=T0O$@ O*?0!AT0O$ 2A= A?#@AE B@ A$ AEA*?@, <<< @T0T0O$@#= A#@ $OT @#=O$A??E ?0A*?@ TO <<< #@=O$@$T *A$H, =0$C@ T@E =0!$@ T@ ?@TT@#[=] O; C#@0T A= M=B#@TEM A= O;;0C@#= O; @? O#O, A$ T@#@;O#@, A$ @DC?B=0F@ ?0A*0?0TE O; @? O#O8 [A$] 4" 0$ T@ A?T@#$AT0F@, T@ B@=T0O$@ T#A$=ACT0O$= A#@ =0)B?AT@ A$ FO0"[11]
0n consideration of .our releasing to """"""""""""""""""""""""""""""""""""""" under the ter's of this Trust #eceipt the goods described herein, 0I2e, (ointl. and severall., agree and pro'ise to pa. to .ou, on de'and, whatever su' or su's of 'one. which .ou 'a. call upon 'eIus to pa. to .ou, arising out of, pertaining to, andIor in an. wa. connected with, this Trust #eceipt, in the event of default andIor nonfulfill'ent in an. respect of this underta/ing on the part of the said """"""""""""""""""""""""""""""""""""""""""" 0Iwe further agree that '.Iour liabilit. in this guarantee shall be 0#@CT A$ 0))@0AT@, without an. need whatsoever on .our part to ta/e an. steps or e
words LFiceresOperations"L *. so signing that trust receipt, petitioners did not bind the'selves personall. liable for @l Oro CorporationMs obligation" 0n Ong v. Court of $ppeals,[1-] a corporate representative signed a solidar. guarantee clause in two trust receipts in his capacit. as corporate representative" There, the Court held that the corporate representative did not underta/e to guarantee personall. the pa.'ent of the corporationMs debts, thus []etitioner did not sign in his personal capacit. the solidar. guarantee clause found on the dorsal portion of the trust receipts" etitioner placed his signature after the t.pewritten words LA#)CO 0$B=T#0A? CO#O#AT0O$L found at the end of the solidar. guarantee clause" @videntl., petitioner did not underta/e to guarant. personall. the pa.'ent of the principal and interest of A#)A!#0Ms debt under the two trust receipts" ence, for the trust receipt dated 9 October 19+1, we sustain petitionersM clai' that the. are not personall. liable for @l Oro CorporationMs obligation" ;or the trust receipt dated %6 =epte'ber 19+1, the dorsal portion of which petitioner ose TupaG signed alone, we find that he did so in his personal capacit." etitioner ose TupaG did not indicate that he was signing as @l Oro CorporationMs Ficeresident for Operations" ence, petitioner ose TupaG bound hi'self personall. liable for @l Oro CorporationMs debts" $ot being a part. to the trust receipt dated %6 =epte'ber 19+1, petitioner etronila TupaG is not liable under such trust receipt" !he %ature of Petitioner Jose !upa&'s iability Under the !rust "e#eipt (ated )* +eptember -
As stated, the dorsal side of the trust receipt dated %6 =epte'ber 19+1 provides To the *an/ of the hilippine 0slands 0n consideration of .our releasing to """"""""""""""""""""""""""""""""""""""" under the ter's of this Trust #eceipt the goods described herein, 0I2e, (ointl. and severall., agree and pro'ise to pa. to .ou, on de'and, whatever su' or su's of 'one. which .ou 'a. call upon 'eIus to pa. to .ou, arising out of, pertaining to, andIor in an. wa. connected with, this Trust #eceipt, in the event of default andIor nonfulfill'ent in an. respect of this underta/ing on the part of the said """"""""""""""""""""""""""""""""""""""""""" 0Iwe further agree that '.Iour liabilit. in this guarantee shall be 0#@CT A$ 0))@0AT@, without an. need whatsoever on .our part to ta/e an. steps or e
0n Prudential /an v. 0ntermediate $ppellate Court ,[1] the Court interpreted a substantiall. identical clause[17] in a trust receipt signed b. a corporate officer who bound hi'self personall. liable for the corporationMs obligation" The petitioner in that case contended that the stipulation Lwe (ointl. and severall. agree and underta/eL rendered the corporate officer solidaril. liable with the corporation" 2e dis'issed this clai' and held the corporate officer liable as guarantor onl." The Court further ruled that had there been 'ore than one signatories to the trust receipt, the solidar. liabilit. would e
[of respondent ban/] to ta/e an. steps or e
the accrued stipulated interest earns 1&5 interest per annu' fro' the ti'e of the filing of the 0nfor'ations in the )a/ati #egional Trial Court on 17 anuar. 19+4" ;urther, the total a'ount due as of the date of the finalit. of this ecision will earn interest at 1+5 per annum until full. paid since this was the stipulated rate in the applications for the letters of credit"[&4] The accounting of @l Oro CorporationMs debts as of &% anuar. 199&, which the trial court used, is no longer useful as it does not specif. the a'ounts owing under each of the trust receipts" ence, in the e
also ordered the trial court to co'pute the a'ount of obligation due based on a for'ula substantiall. si'ilar to that indicated above The total a'ount due <<< [under] the <<< contract[] <<< 'a. be easil. deter'ined b. the trial court through a si'ple 'athe'atical co'putation based on the for'ula specified above" )athe'atics is an e
The rule is that where the civil action is i'pliedl. instituted with the cri'inal action, the civil liabilit. is not e
TOTA? A)OB$T B@ Z [principal interest interest on interest] partial pa.'ents 'ade[&] 0nterest Z principal < 1+ 5 per annu' < no" of .ears fro' due date[&7] until finalit. of (udg'ent 0nterest on interest Z interest co'puted as of the filing of the co'plaint :17 anuar. 19+43 < 1&5 < no" of .ears until finalit. of (udg'ent Attorne.Ms fees is 165 of the total a'ount co'puted as of finalit. of (udg'ent Total a'ount due as of the date of finalit. of (udg'ent will earn an interest of 1+5 per annu' until full. paid" 0n so delegating this tas/, we reiterate what we said in "i&al Commer#ial /aning Corporation v. $lfa "!2 3anufa#turing Corporation [&+] where we
On the other 3atters Petitioners "aise
etitioners raise for the first ti'e in this appeal the contention that @l Oro CorporationMs debts under the trust receipts are not .et due and de'andable" Alternativel., petitioners assail the trust receipts as si'ulated" These assertions have no 'erit" Bnder the ter's of the trust receipts dated %6 =epte'ber 19+1 and 9 October 19+1, @l Oro CorporationMs debts fell due on &9 ece'ber 19+1 and + ece'ber 19+1, respectivel." $either is there 'erit to petitionersM clai' that the trust receipts were si'ulated" uring the trial, petitioners did not den. appl.ing for the letters of credit and subseuentl. e
we GRANT the petition in part" 2e A**RM the ecision of the Court of Appeals dated 7 =epte'ber &666 and its #esolution dated 1+ October &666 with the following MOD*CATONS
13 @l Oro @ngraver Corporation is principall. liable for the total a'ount due under the trust receipts dated %6 =epte'ber 19+1 and 9 October 19+1, as co'puted b. the #egional Trial Court, )a/ati, *ranch 144, upon finalit. of this ecision, based on the for'ula provided above8
latterMs business" rivate respondent, persuaded b. the assurances of petitioner that ?uanGonMs business was stable and b. the high interest rate, agreed to lend ?uanGon 'one. in the a'ount of 1-6,666" On une &&, 19+7, ?uanGon issued and signed a pro'issor. note ac/nowledging receipt of the 1-6,666 fro' private respondent
&3 etitioner ose C" TupaG 0F is liable for @l Oro @ngraver CorporationMs total debt under the trust receipt dated %6 =epte'ber 19+1 as thus co'puted b. the #egional Trial Court, )a/ati, *ranch 1448 and
and obliging herself to pa. the for'er t he said a'ount on or before August &&,
%3 etitioners ose C" TupaG 0F and etronila C" TupaG are not liable under the trust receipt dated 9 October 19+1"
dated August &&, 19+7 pa.able to ?eonila To'acruG in the a'ount of 1-6,666"[-]
SO ORDERED.
19+7"[4] etitioner signed the pro'issor. note, affi
1+" AC0O$A#0A C" *AE?O$, petitioner, vs" T@ O$O#A*?@ COB#T O; A@A?= :;or'er $inth ivision3 and ?@O$0?A TO)AC#B, respondents"
rivate respondent 'ade a written de'and upon petitioner for pa.'ent, which petitioner did not heed" Thus, on )a. +, 19+9, private respondent filed a case for
!"#" $o" 169941 K 19996+17 DECSON
!O$A!A#@E@=, " This is a petition for review b. wa. of certiorari under #ule 4- of the #evised #ules of Court of the decision of the Court of Appeals[1] dated $ove'ber &9, 1991 in CA !"#" CF $o" &7779 affir'ing the decision[&] of the #egional Trial Court of ueGon Cit., *ranch ++, dated une 14, 1996 in Civil Case $o" +9&4+% and the #esolution of the Court of Appeals dated April &7, 199% den.ing petitionerMs )otion for #econsideration" The pertinent facts, as found b. the trial court and affir'ed b. respondent court, are briefl. narrated as follows =o'eti'e in 19+, petitioner acionaria C" *a.lon introduced private respondent ?eonila To'acruG, the co'anager of her husband at ?T, to #osita *" ?uanGon"[%] etitioner told private respondent that ?uanGon has been engaged in business as a contractor for twent. .ears and she invited private respondent to lend ?uanGon 'one. at a 'onthl. interest rate of five percent :-53, to be used as capital for the
the collection of a su' of 'one. with the #egional Trial Court :#TC3 of ueGon Cit., *ranch ++, against ?uanGon and petitioner herein, i'pleading )ariano *a.lon, husband of petitioner, as an additional defendant" owever, su''ons was never served upon ?uanGon" 0n her answer, petitioner denied having guaranteed the pa.'ent of the pro'issor. note issued b. ?uanGon" =he clai'ed that private respondent gave ?uanGon the 'one., not as a loan, but rather as an invest'ent in Art @nterprises and Construction, 0nc" the construction business of ?uanGon" ;urther'ore, petitioner avers that, granting arguendo that there was a loan and petitioner guaranteed the sa'e, private respondent has not e
'onthl. interest and not an invest'ent" 0n fact the. all ad'itted in their
?BA$O$"
testi'onies that the. are not given an. stoc/ certificate but onl. pro'issor. notes si'ilar to @
000" !#A$T0$!, 20TOBT A)0TT0$! TAT @T0T0O$@#A@??A$T *AE?O$ 2A=
pa. the a'ount of indebtedness on the date due" ostdated chec/s were issued
A !BA#A$TO# B$@# TAT $OT@ :@D0*0T LAL3 AT@ B$@ &&, 19+7, T@
si'ultaneousl. with the pro'issor. notes to enable the plaintiff and others to
?O2@# COB#T @##@ 0$ #@=O?F0$! TAT =@ 2A= $OT #@?@A=@ ;#O) @#
withdraw their 'one. on a certain fi
!BA#A$TE *E T@ =B*=@B@$T T#A$=ACT0O$= *@T2@@$ T@ #@=O$@$T
participants in the business transaction of defendant ?uanGon but were creditors"
A@??A$T A$ @;@$A$T ?BA$O$"
The evidences presented li/ewise show that plaintiff and others loan their 'one. to
At the outset, we note that petitionerMs clai' that the factual findings of the lower
defendant ?uanGon because of the assurance of the 'onthl. inco'e of five percent
court, which were affir'ed b. the Court of Appeals, were based on a
:-53 of their 'one. and that the. could withdraw it an.ti'e after the due date add
'isapprehension of facts and contradicted b. the evidence on records[16] is a bare
to it the fact that their friend, acionaria *a.lon, e
allegation and devoid of 'erit" As a rule, the conclusions of fact of the trial court,
gurarantee to the pa.'ent of the a'ount loaned"
especiall. when affir'ed b. the Court of Appeals, are final and conclusive and cannot be reviewed on appeal b. the =upre'e Court"[11] Although this rule ad'its
<<< << <<<
of several e
2@#@;O#@, pre'ises considered, (udg'ent is hereb. rendered against the
based on substantial evidence"
defendants acionaria C" *a.lon and )ariano *a.lon, to pa. the plaintiff the su' of 1-6,666"66, with interest at the legal rate fro' the filing of this co'plaint until full
etitioner clai's that there is no loan to begin with8 that private respondent gave
pa.'ent thereof, to pa. the total su' of &1,666"66 as attorne.Ms fees and costs of
?uanGon the a'ount of 1-6,666, not as a loan, but rather as an invest'ent in the
suit"[9]
construction pro(ect of the latter"[1%] 0n support of her clai', petitioner cites the use b. private respondent of the words Linvest'ent,L Ldividends,L and
On appeal, the trial courtMs decision was affir'ed b. the Court of Appeals" ence,
Lco''issionL in her testi'on. before the lower court8 the fact that private
this present case wherein petitioner 'a/es the following assign'ent of errors
respondent received 'onthl. chec/s fro' ?uanGon in the a'ount of 7,-66 fro' ul. to ece'ber, 19+7, representing dividends on her invest'ent8 and the fact
0" #@=O$@$T COB#T @##@ 0$ O?0$! TAT T@ #0FAT@ #@=O$@$T
that other e'plo.ees of the evelop'ent *an/ of the hilippines 'ade si'ilar
TO)AC#B 2A= A C#@0TO# O; @;@$A$T ?BA$O$ A$ $OT A$ 0$F@=TO# 0$
invest'ents in ?uanGonMs construction business"[14]
T@ CO$=T#BCT0O$ *B=0$@== O; A#T @$T@##0=@= > CO$=T#BCT0O$, 0$C" owever, all the circu'stances 'entioned b. petitioner cannot override the clear 00" !#A$T0$!, 20TOBT A)0TT0$!, TAT @T0T0O$@#A@??A$T *AE?O$ 2A=
and uneuivocal ter's of the une &&, 19+7 pro'issor. note whereb. ?uanGon
A L!BA#A$TO#L A= A@A#0$! 0$ T@ $OT@ :@D" LAL3 T@ #@=O$@$T COB#T
pro'ised to pa. private respondent the a'ount of 1-6,666 on or before August
@##@ 0$ #B?0$! TAT @T0T0O$@#A@??A$T *AE?O$ 0= ?0A*?@ TO T@
&&, 19+7" The pro'issor. note states as follows
#0FAT@ #@=O$@$T *@CAB=@ T@ ?ATT@# A= $OT TAH@$ =T@= TO @DAB=T T@ #O@#TE O; T@ #0$C0A? @*TO# A$ A= $OT #@=O#T@ TO A?? T@ ?@!A? #@)@0@= #OF0@ *E ?A2 A!A0$=T T@ @*TO#, @;@$A$T
une &&, 19+7
To 2ho' 0t )a. Concern
The transaction at bench is therefore a loan, not an invest'ent"
;or value received, 0 hereb. pro'ise to pa. )rs" ?@O$0?A TO)AC#B the a'ount
0t is petitionerMs contention that, even though she is held to be a guarantor under
of O$@ B$#@ ;0;TE TOB=A$ @=O= O$?E :1-6,666"663 on or before
the ter's of the pro'issor. note, she is not liable because private respondent did
August &&, 19+7"
not e
The above a'ount is covered b. \\\\\ Chec/ $o" \\\\\ dated August &&, 19+7"
benefit of e
:signed3 The guarantor cannot be co'pelled to pa. the creditor unless the latter has #O=0TA *" ?BA$O$
e
!B#A#A$TO# 0t is a
properties of the principal debtor 'ust first be e
AC0O$A#0A O" *AE?O$
obtained against the principal debtor and the latter is unable to pa., Lfor obviousl. the Me
Tel" $o" +61&+66
clai's cannot even begin to ta/e place before (udg'ent has been obtained"L[&1] This rule is e'bodied in article &6& of the Civil Code which provides that the action
1+ " )apa =t", * Fillage
brought b. the creditor 'ust be filed against the principal debtor alone, e
Al'anGa, ?as inas, )")"[1-]
principal debtor"[&&]
0f the ter's of a contract are clear and leave no doubt as to the intention of the
Bnder the circu'stances availing in the present case, we hold that it is pre'ature
contracting parties, the literal 'eaning of its stipulation shall control"[1] #esort to
for this Court t o even deter'ine whether or not petitioner is liable as a guarantor
e
and whether she is entitled to the conco'itant rights as such, li/e the benefit of
the partiesM intent when there is no a'biguit. in the ter's of the agree'ent"[17]
e
*oth petitioner and private respondent do not den. the due e
first obtained against the principal debtor #osita *" ?uanGon" 0t is useless to spea/
authenticit. of the une &&, 19+7 pro'issor. note" All of petitionerMs argu'ents are
of a guarantor when no debtor has been held liable for the obligation which is
directed at uncovering the real intention of the parties in e
allegedl. secured b. such guarantee" Although the principal debtor ?uanGon was
note, but no a'ount of argu'entation will change the plain i'port of the ter's
i'pleaded as defendant, there is nothing in the records to show that su''ons was
thereof, and accordingl., no atte'pt to read into it an. alleged intention of the
served upon her" Thus, the trial court never even acuired (urisdiction over the
parties thereto 'a. be (ustified"[1+] The clear ter's of the pro'issor. note
principal debtor" 2e hold that private respondent 'ust first obtain a (udg'ent
establish a creditordebtor relationship between ?uanGon and private respondent"
against the principal debtor before assu'ing to run after the alleged guarantor"
0$ F0@2 O; T@ ;O#@!O0$!, the petition is granted and the uestioned ecision of the Court of Appeals dated $ove'ber &9, 1991 and #esolution dated April &7, 199% are =@T A=0@" $o pronounce'ent as to costs" =O O#@#@"
19. ANTONIO R. BANZON and ROSA BALMACEDA, petitioners, vs. HON. ERNANDO CR!Z, Spo"ses #EDRO CARDENAS and LEONILA BAL!$OT and ASSOCIATED INS!RANCE % S!RET$ COM#AN$, INC. represented &' INS!RANCE COMMISSIONER in (er )apa)it' as LI*!IDATOR O ASSOCIATED INS!RAN +.R. No. L-1/9 0 19239 DECISION TEEHANKEE, J.:
An ori4ina5 a)tion to en6oin respondent )o"rt 7ro8 en7or)in4 a rit o7 possession and order o7 de8o5ition over one o7 to Ca5oo)an Cit' 5ots ori4ina55' oned &' petitionersspo"ses pendin4 t(e o"t)o8e o7 t(eir s"it 7or re)onve'an)e o7 said 5ots 7ro8 private respondents. So8eti8e in 19:, Ma;i8o Sta. Maria o&tained )rop 5oans 7ro8 t(e #(i5ippine Nationa5 Ban< =(ereina7ter re7erred to as t(e &an<>. Respondent Asso)iated Ins"ran)e % S"ret' Co., In). =(ereina7ter re7erred to as Asso)iated> a)ted as s"ret' o7 Sta. Maria, ?5in4 s"ret' &onds in 7avor o7 t(e &an< to anser 7or pro8pt repa'8ent o7 t(e 5oans. #etitioner Antonio R. Ban@on and E8i5io Ma. Nava5 in t"rn a)ted as inde8nitors o7 Asso)iated and ere o&5i4ated to inde8ni7' and (o5d (ar85ess Asso)iated 7ro8 an' 5ia&i5it' 7or t("s a)tin4 as s"ret' o7 t(e 5oan. Sta. Maria 7ai5ed to pa' (is o&5i4ations to t(e &an<, (i)( a))ordin45' de8anded pa'8ent 7ro8 Asso)iated as s"ret'. Instead o7 pa'in4 t(e &an<, Asso)iated ?5ed a )o8p5aint dated Nove8&er 19, 19:3 it( t(e Co"rt o7 irst Instan)e o7 Mani5a 1 a4ainst de&tor Sta. Maria and inde8nitors Ban@on and Nava5, a55e4in4 t(at t(e o"tstandin4 o&5i4ations o7 Sta. Maria it( t(e &an< 4"aranteed &' it a8o"nted to #3,122.22, #9,-3. and
#1,/11., or atotal of P30,257.86, e;)5"din4 interest. On De)e8&er 11, 19:, t(e said )o"rt rendered 6"d48ent orderin4 Sta. Maria, Ban@on and Nava5 to pa' 6oint5' and severa55' "nto p5ainti for the benet of the Philippine National Bank"t(e a8o"nts 8entioned a&ove, it( interest t(ereon at 1F per ann"8, #:9-.3 7or pre8i"8s and do)"8entar' sta8ps d"e, and 1:F attorne'Gs 7ees, t(e 1:F and t(e interest to &e paid 7or t(e &ene?t on5' o7 t(e p5ainti. (at (appened t(erea7ter is narrated in t(e de)ision o7 t(is Co"rt rendered on November 29, 968 in t(e appea5 instit"ted &' petitioner Ban@on and (is spo"se, )opetitioner Rosa Ba58a)eda, 7ro8 a s"&se"ent a)tion o7 Asso)iated in t(e Co"rt o7 irst Instan)e o7 Ri@a5 (erein t(e Ri@a5 )o"rt ordered Ban@on to s"rrender 7or )an)e55ation (is onerGs d"p5i)ates o7 tit5es to (is to Ca5oo)an Cit' 5ots (i)( (ad &een 5evied "pon and p"r)(ased at t(e e;e)"tion sa5e &' Asso)iated in s"pposed satis7a)tion o7 t(e Mani5a )o"rtGs 6"d48ent, do)
(ntan&eof /ial in !ae No. 3885, .#./.. /e&or' No. 267, a petition for an or'er 'ire&tin4 %ntonio /. Banon to preent hi oner '+pli&ate of !erti&ate of itle No. 39685 an' 53759 to the /e4iter of ee' of /ial for &an&ellation, and 7or anot(er order dire)tin4 t(e Re4ister o7 Deeds o7 Ri@a5 to )an)e5 said d"p5i)ates and to iss"e ne trans7er )erti?)ates o7 tit5e )overin4 t(e properties in t(e na8e o7 petitioner.
Ban@on ?5ed (is opposition to t(e petition )5ai8in4 8ain5' t(at =1> t(e de)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a in Civi5 Case No. -1- as void as 7ar as (e as )on)erned &e)a"se (e (ad never &een s"88oned in )onne)tion t(ereit(, and t(at => t(e 5ev' and sa5e o7 t(e properties )overed &' t(e petition ere 5i propert' it(o"t d"e pro)ess o7 5a (ad (e &"t dis)(ar4ed (is &"rden o7 proo7, t("sJ it( respe)t to appe55antsG )ontention t(at Antonio R. Ban@on (ad not &een d"5' served it( s"88ons in )onne)tion it( Civi5 Case No. -1- o7 t(e Co"rt o7 irst Instan)e o7 Mani5a, it is eno"4( 7or "s to "ote (ere t(e pertinent portions o7 t(e e55)onsidered de)ision o7 t(e 5oer )o"rt P it( respe)t to t(e ?rst )ontention o7 oppositors, t(e 5atter in ee)t )ontends t(at not (avin4 &een served &' s"88ons, Antonio Ban@on never &e)a8e a part' de7endant to t(e a7oresaid )ivi5 )ase and (en)e not &o"nd &' an' 6"d48ent rendered t(erein. It is
erroneo"s on t(e part o7 t(e petitioner to )ontend t(at t(e o&6e)tion as to 5a)< o7 6"risdi)tion on t(e de7endantGs person (as &een aived 7or said aiver app5ies on5' (en s"88ons (as &een served a5t(o"4( de7e)tive5', s")( as one not served &' t(e proper o)er. (f the &ontention of the oppoitor ere tr+e, that i, no +mmon as ever erve' +pon him an' that he a &ompletel +naare of the pro&ee'in4 in the &ivil &ae aforementione', the propertie in +etion &o+l' not be levie' +pon for that o+l' amo+nt to a 'eprivation of oppoitor propert itho+t '+e pro&e of la. T(e &"rden, (oever, rests "pon t(e oppositors to prove t(at t(ere as in 7a)t no servi)e o7 s"88ons and t(is, t(e )o"rt &e5ieves, t(e oppositors (ave 7ai5ed to s"&stantiate it( s")ient eviden)e. It is a 7"nda8enta5 r"5e t(at t(e re4"5arit' o7 a55 o)ia5 a)tions and pro)eedin4s i55 &e pres"8ed "nti5 t(e )ontrar' is proved. In said )ivi5 )ase No. -1-, t(e re)ords s(o, parti)"5ar5' t(e anser and t(e 8otion to dis8iss, t(at t(e pro)eedin4s ere )ond")ted &' )o"nse5 in &e(a57 o7 a55 t(e de7endants t(erein in)5"din4 t(e oppositor, Antonio Ban@on. T(e pres"8ption t(ere7ore, o7 t(e re4"5arit' o7 t(e pro)eedin4s as a4ainst said de7endant i55 &e 8aintained in)5"din4 t(e 7a)t t(at eit(er s"88ons as d"5' served or t(at t(e de7endant Ban@on vo5"ntari5' appeared in )o"rt it(o"t s")( s"88ons. It is t(ere7ore in)"8&ent "pon t(e oppositors to re&"t t(is pres"8ption it( )o8petent and proper eviden)e s")( as t(e ret"rn 8ade &' t(e s(eri (o served t(e s"88ons in "estion. T(is, (oever, t(e oppositors (ave not 8et. GMoreover, t(e )ir)"8stan)es o7 t(e )ase a55 t(e 8ore &ear o"t t(e stren4t( o7 t(is pres"8ption (en it )onsidered t(at t(e oppositor Antonio Ban@on re)eived a noti)e o7 e;e)"tion and 5ev' o7 t(ese properties and noti)e o7 t(e sa5e o7 t(e sa8e at p"&5i) a")tion. Had t(e oppositors (ave &een pre6"di)ed &' &ein4 deprived o7 d"e pro)ess, t(e' s(o"5d (ave ?5ed eit(er a t(ird part' )5ai8 "pon t(e propert' 5evied or an in6"n)tion pro)eedin4 to prevent its sa5e at p"&5i) a")tion, nor o"5d t(e' (ave a55oed t(e )ons"88ation o7 t(e sa5e and t(e 5apse o7 one 'ear it(in (i)( t(e rede8ption o"5d (ave &een e;er)ised. T(ese 7a)ts 4rave5' 8i5itate a4ainst t(e 8erits o7 t(e opposition, not on5' inso7ar as it stren4t(ens t(e a7oresaid pres"8ption o7 re4"5arit', &"t a5so inso7ar as t(e' are indi)ative o7 t(e 7a)t t(at t(e properties 5evied "pon are not )on6"4a5 propert' or even i7 t(e' ere t(at t(e de&t invo5ved as one (i)( redo"nd to t(e &ene?t o7 t(e 7a8i5' 7or (i)( t(e )on6"4a5 partners(ip 8a' &e (e5d 5ia&5e.G Appe55antsG se)ond )ontention na8e5', t(at t(e properties no in "estion are t(eir )on6"4a5 properties, is &e5ied &' t(e re)ord &e7ore "s (i)( s(os
t(at Trans7er Certi?)ates o7 Tit5e Nos. -93/: and :-:9 ere iss"ed in t(e na8e o7 Antonio R. Ban@on. Moreover, t(ere is no s")ient eviden)e in t(e re)ord to s(o t(at t(e properties ere a)"ired d"rin4 appe55antsG 8arria4e. IN QIE O ALL THE ORE+OIN+, t(e de)ision appea5ed 7ro8 is (ere&' ar8ed, it( )osts.: It (as no &een e;posed t(at notit(standin4 t(e 6"d48ent o7 e&ember , 957 o&tained 7ro8 t(e Mani5a )o"rt &' Asso)iated and e;e)"ted &' it a4ainst petitioner Ban@on as inde8nitor for the benet of the Philippine National Bank," and (i)( 6"d48ent it o&tained and e;e)"ted on t(e representation to t(e said )o"rt t(at t(e &an< as e;a)tin4 pa'8ent 7ro8 it as s"ret' o7 t(e de&tor Sta. MariaGs 5oans, and t(at it as t(ere7ore en7or)in4 Ban@onGs "nderta (en t(e de&t (as &e)o8e de8anda&5e, &' reason o7 t(e e;piration o7 t(e period 7or pa'8ent and t(at t(e a)tion o7 t(e 4"arantor is to obtain releae from the 4+arant , or to 'eman' a e&+rit t(at s(a55 prote)t (i8 7ro8 an' pro)eedin4s &' t(e )reditor and 7ro8 t(e dan4er o7 inso5ven)' o7 t(e de& tor. In 7a)t, sin)e the bank 7ai5ed to e;a)t pa'8ent 7ro8 Asso)iated as s"ret' o7 t(e de&tor Ma;i8o Sta. MariaGs 8at"red o&5i4ations, t(e &an< itse57 ?5ed on 1ebr+ar 0, 96, it on &omplaint it( t(e Co"r t o7 ir st Instan)e o7 #a8 pan4a a4aint prin&ipal 'ebtor Ma;i8o Sta. Maria, hi i< brother an' iter =(o (ad e;e)"ted a spe)ia5 poer o7 attorne' in Sta. MariaGs 7avor to 8ort4a4e a 13(e)tare par)e5 o7 5and 6oint5' oned &' a55 o7 t(e8 as se)"rit' a5so 7or t(e &an, an' %o&iate' itelf, +ret, a 'efen'ant, 7or t(e &olle&tion o7 t(e o"tstandin4 o&5i4ations d"e 7ro8 t(e prin)ipa5 de&tor, Ma;i8o Sta. Maria. A7ter tria5, t(e )o"rt ordered a55 t(e de7endants 6oint5' and severa55' to pa' t(e &an< t(e o"tstandin4 a8o"nts d"e on t(e )rop 5oans to Sta. Maria, (i)( as o7 t(at 8")( 5ater date, %+4+t 20, 963,
a8o"nted on5' to #3,122.22 and #9,-3. or a tota5 o7 P5,6. , e;)5"sive o7 interests. It s(o"5d &e noted t(ere7ore, t(at t(e de&tor Sta. Maria (ad &een 8a 'ears ear5ier in 957 a4ainst Ban@on for the benet o7 the Philippine National Bank" a55e4ed5' as t(e a8o"nt d"e 7ro8 Sta. Maria and (i)( Asso)iated as s"ret' o"5d (ave to pa' t(e &an<, and (i)( as it t"rns o"t, Asso)iatednever paid to t(e &an<. T(ese 7a)ts and ?4"res are o7 re)ord in t(is Co"rtGs de)ision o7 %+4+t 29, 969, in Philippine National Bank v. *ta. :aria, et al.=3 (erein it is 7"rt(er re)orded t(at =D>e7endant Ma;i8o Sta. Maria and (is +ret, 'efen'ant %o&iate' (n+ran&e ) *+ret !o., (n&. ho 'i' not reit the a&tion, 'i' not appeal the >+'4ment =senten)in4 a55 de7endants 6oint5' and severa55' to pa' t(e &an< t(e a&ove re7erred to prin)ipa5 a8o"nt o7 #1:,3., e;)5"din4 interests>. T(is Co"rt s"stained t(e appea5 ta, so as to (o5d t(e8 5ia&5e
7or t(e "npaid &a5an)es o7 t(e 5oans o&tained &' Ma;i8o "nder t(e )(atte5 8ort4a4es e;e)"ted &' (i8 in (is on na8e )(atte5 a5one.
3. ina55', as to t(e 12F aard o7 attorne'Gs 7ees, t(is Co"rt &e5ieves t(at )onsiderin4 t(e reso"r)es o7 p5ainti &an< and t(e 7a)t t(at t(e prin)ipa5 de&tor, Ma;i8o Sta. Maria, (ad not )ontested t(e s"it, an aard o7 ?ve =:F> per )ent o7 t(e &a5an)e d"e on t(e prin)ipa5, e;)5"sive o7 interests, i. e., a &a5an)e o7 P6,00.00 on t(e ?rst )a"se o7 a)tion and a &a5an)e o7 P9,36. on t(e se)ond )a"se o7 a)tion, per the bank tatement of %+4+t 20, 963, =E;(s. *1 and BB1, respe)tive5'> s(o"5d &e s")ient. HEREORE, t(e 6"d48ent o7 t(e tria5 )o"rt a4ainst de7endants appe55ants E8eteria, Teo?5o, *"intin, Rosario and Leoni5a, a55 s"rna8ed Sta. Maria is (ere&' reversed and set aside, it( )osts in &ot( instan)es a4ainst p5ainti. T(e 6"d48ent a4ainst de7endant appe55ant Qa5eriana Sta. Maria is 8odi?ed in t(at (er 5ia&i5it' is (e5d to &e 6oint and not so5idar', and t(e aard o7 attorne'Gs 7ees is red")ed as set 7ort( in t(e pre)edin4 para4rap(, it(o"t )osts in t(is instan)e. T(e &an< t("s )o55e)ted 'ire&tl 7ro8 its de&tor Sta. Maria t(e a8o"nts oin4 to it, it( Asso)iated never (avin4 p"t in one )entavo. #er t(e &an+'i&ial ale of the mort4a4e' propertie of 'efen'ant *ta. :aria?? in vie o7 (i)( e =#(i5ippine Nationa5 Ban<, (ave no releae' the %o&iate' (n+ran&e ) *+ret !o.. (n&. o7 its >oint obli4ation ith :a
6"d48ent as "for the benet of the Philippine National Bank" and it (ad not dis)(ar4ed its s"ret'Gs 5ia&i5it' to t(e &an<>, Asso)iated in )5ear )o55"sion and )on7ederation it( =respondent> #edro Cardenas, a55oed and per8itted t(e 5atter to e;e)"te and 5ev' on one o7 t(e to par)e5s o7 5and =t(at )overed &' T.C.T. No. -93/: Ri@a5, Lot 3, B5o)< No. 13 o7 s"&division p5an #sd/93, +.L.R.O. Re). No. 113> 7or a 6"d48ent de&t o7 #:,122.22 =o7 Asso)iated in 7avor o7 Cardenas>/ notit(standin4 t(at t(e propert' in "estion as ort( #1-2,222.22 8ore or 5ess, and 7"rt(er notit(standin4 t(e 7a)t t(at said respondent =Asso)iated> +'i&e in %o&iate' v. Banon , to &e reso5ved 8")( 5ater 'et &' t(is Co"rtGs de)ision o7 November 29, 968 . Asso)iated 8ade no 8ove to "estion or )(a55en4e t(is a)tion o7 Cardenas, notit(standin4 an or'er for it li+i'ation an' 'iol+tion i+e' on e&ember 3, 965 &' t(e Co"rt o7 irst Instan)e o7 Mani5a and event"a55' ar8ed &' t(is Co"rt per reso5"tion o7 K"ne 2, 193/ in +.R. No. L-/9-. Nor did Asso)iated 8a entit5ed #edro Cardenas, et a5., petitioners v. Antonio Ban@on, et a5., respondents, to se)"re possession 7ro8 t(e Ban@ons o7 t(e 5ot )overed &' T.C.T. No. /:3. A rit o7 possession as iss"ed in said )ase on Ma' 1, 193:, &"t t(e en7or)e8ent t(ereo7 as (e5d in a&e'an)e in vie o7 t(e ?5in4 it( t(e sa8e )o"rt o7 Civi5 Case No. C:-1 entit5ed Antonio Ban@on, et a5. v. #edro Cardenas and Leoni5a Ba5"'ot, Asso)iated Ins"ran)e and S"ret' Co., In). and Benito Ma)ro(on. Ban@onGs )o8p5aint in Civi5 Case No. C:-I as, (oever, dis8issed
on %+4+t 6, 969, on t(e 4ro"nd t(at t(e 8atter o7 t(e 5e4a5it' o7 t(e trans7er o7 oners(ip o7 t(e propert' in "estion 7ro8 t(e p5ainti to t(e Asso)iated Ins"ran)e % S"ret' Co., In)., (as &een "p(e5d &' t(e S"pre8e Co"rt in its de)ision pro8"54ated on Nove8&er 9, 193/, and )onse"ent5' t(e trans7er to t(e spo"ses #edro Cardenas and Leoni5a Ba5"'ot 8"st per7or)e &e )onsidered a5so as va5id and 5e4a5. Conse"ent5', respondent Cardenas ?5ed a 8otion on O)to&er 1-, 1939, in Case No. C11 7or t(e iss"an)e o7 analia rit o7 possession t(is as 4ranted on O)to&er -, 1939. T(e alia rit as served on Ban@on, (o re7"sed to va)ate t(e pre8ises and to re8ove t(e i8prove8ents t(ereon. In vie o7 t(is, an order as iss"ed on De)e8&er 9, 1939, 7or t(e iss"an)e o7 a rit o7 de8o5ition, &"t its en7or)e8ent as (e5d in a&e'an)e &e)a"se a te8porar' restrainin4 order, 5ater )(an4ed to a rit o7 pre5i8inar' in6"n)tion, as iss"ed &' t(e Co"rt o7 Appea5s on e&ember 3, 969, in vie o7 t(e ?5in4 &' t(e Ban@ons it( t(e said appe55ate )o"rt o7 a petition 7or in6"n)tion.12 On 1ebr+ar 28, 970 t(e Co"rt o7 Appea5s rendered 6"d48ent dis8issin4 t(e petition &e)a"se it 7o"nd t(e sa8e to &e a55e4ed5' 8ere5' a devi)e to prevent t(e e;e)"tion o7 a ?na5 6"d48ent &' t(e ?5in4 o7 a ne s"it &ased "pon t(e sa8e 4ro"nds (i)( (ave a5read' &een interposed and passed "pon in t(e )ase (ere t(e ?na5 6"d48ent (ad a5read' &een rendered . Cardenas t(erea7ter ?5ed a 8otion 7or t(e en7or)e8ent o7 t(e order o7 de8o5ition and rit o7 possession previo"s5' iss"ed in Re4. Case No. C11. On Mar)( 1-, 192, K"d4e ernando A. Cr"@ o7 t(e Co"rt o7 irst Instan)e o7 Ca5oo)an Cit' Bran)( II, iss"ed an order 4rantin4 t(e 8otion.11 On Mar)( 1-, 192, t(e Ban@ons (avin4 5earned o7 t(e &an
interests or 6"st one$half o7 t(e premat+re 6"d48ent 7or #-2,:./3, e;)5"din4 interests o&tained &' Asso)iated si; =3> 'ears ear5ier in 19: a4ainst Ban@on in tr+t an' for the benet of the bank a55e4ed5' as t(e a8o"nt oed &' Sta. Maria and to &e dis)(ar4ed &' Asso)iated, (i)( Asso)iated never dis)(ar4ed> 1a and t(at t(e &an<, per its 5etter o7 1ebr+ar 20, 970 (ad t(ere7ore a&so5"te5' re5eased Asso)iated o7 an' 5ia&i5it' on its s"ret' "nderta and No. :-:9 =sti55 in Ban@onGs na8e>, in dis)(ar4e o7 Asso)iatedGs implie' tr+t not to "n6"st5' enri)( itse57 and appropriate Ban@onGs properties at a&so5"te5' no )ost to itse57. On Mar)( 13, 192, t(e S(eri o7 Ca5oo)an Cit' served "pon t(e Ban@ons )op' o7 t(e a7oresaid order 4ivin4 t(e8 "nti5 Mar)( 2, 192, it(in (i)( to de5iver possession o7 t(e par)e5 o7 5and )overed &' T.C.T. No. /:3, and to re8ove t(e i8prove8ents t(ereon ot(erise, t(e said s(eri o"5d pro)eed to en7or)e t(e sa8e. #etitioners Ban@ons t(ere7ore )a8e to t(is Co"rt on Mar)( 2, 192, &' 8eans o7 t(e present petition 7or in6"n)tion. At petitionersG instan)e, t(e Co"rt on :ar&h 2, 970 restrained respondents and t(eir representatives 7ro8 en7or)in4 t(e "estioned rit o7 e;e)"tion and order o7 de8o5ition, and respondent Asso)iated 7ro8 disposin4 in an' 8anner o7 its a55e4ed ri4(ts and interests over t(e to 5ots in "estion. Respondents Cardenas spo"ses ?5ed in d"e )o"rse t(eir Anser dated Apri5 , 192, ad8ittin4 in ee)t t(e ante)edents o7 t(e )ase as re)ited a&ove, )itin4 even t(is Co"rtGs de)ision o7 Nove8&er 9, 193/ in %o&iate' v. Banon, +pra, (i)( ar8ed t(e 8one' 6"d48ent in 7avor o7 Asso)iated "for the benet of the Philippine National Bank 1- &"t a55e4in4 t(at oners(ip to one par)e5 =Lot 3, B5o)< 13 )overed &' T.C.T. No. /:3> (as a5read' a&so5"te5' and irrevo)a&5' vested in (erein respondent #edro Cardenas.1 Said respondents 7"rt(er averred t(at t(ere is no 5on4er an't(in4 t(at 8a' &e restrained, sin)e per t(e s(eriGs ret"rn o7 Mar)( -, 192, (e en7or)ed on said date respondent )o"rtGs rit o7 possession and de8o5ition order and de8o5is(ed a55 t(e i8prove8ents ere)ted in t(e pre8ises.1: To t(is petitioners )o"ntered t(at t(e spe)ia5 dep"t' s(eri o7 Ri@a5 did s"))eed in de8o5is(in4 t(e &"i5din4 ere)ted on t(e 5ot in "estion. T(is (e did notithtan'in4 the fa&t that he ha been
'+l informe' b petitioner Banon of the e
Most re5evant, (oever, as a p5eadin4 entit5ed E;p5anation and Mani7estation dated Apri5 :, 192 ?5ed &' Att'. e5i&erto Casti55o, as 7or8er )o"nse5 7or Asso)iated, in t(e interest o7 6"sti)e and in t(e na8e o7 tr"t( and as an o)er o7 t(e Co"rt, (erein it( respe)t to t(e s"88ons 7or Asso)iated re)eived &' (is 5a o)e, (e 8ani7estsJ -. T(at (e is entertainin4 a serio"s do"&t (et(er (e )o"5d sti55 represent t(e Asso)iated Ins"ran)e % S"ret' Co., In). in vie o7 t(e 7a)t t(at in !ivil !ae No. 56995 of the !o+rt of 1irt (ntan&e of :anila, entitle' /ep+bli& of the Philippine, repreente' b the (n+ran&e !ommiioner v. %o&iate' (n+ran&e ) *+ret !o., (n&. t(e said Co"rt o7 irst Instan)e o7 Mani5a or'ere' the li+i'ation an' 'iol+tion of thi +ret &ompan, (i)( as appea5ed to t(e Co"rt o7 Appea5s, CA+.R. No. -9/:R, &"t ar8ed t(e de)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a in a de)ision pro8"54ated on Kan"ar' -, 193/, (i)( as appea5ed a4ain &' t(e Asso)iated Ins"ran)e % S"ret' Co., In). to t(e Honora&5e Tri&"na5, ./. No. #$2893, alo a@rmin4 the 'e&iion of the !o+rt of %ppeal b 'enin4 the petition for a rit of &ertiorari in it reol+tion of A+ne 20, 968, and t(ere7ore, sin)e t(en, t(e de)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a orderin4 t(e 5i"idation and disso5"tion o7 t(e Asso)iated Ins"ran)e % S"ret' Co., In). &e)a8e ?na5 and e;e)"tor', and t(erea7ter, t(e Ins"ran)e Co88issioner de8anded t(e s"rrender o7 &oo
Banon, +pra, ar8in4 on November 29, 968 t(e Ri@a5 )o"rtGs 6"d48ent 7or )onso5idation and
U T(at sin)e Asso)iated as ordered 5i"idated and disso5ved &' t(e Mani5a )o"rt o7 ?rst instan)e in Civi5 Case No. :399:, as ar8ed &' t(e Co"rt o7 Appea5s in CA+.R. No. -9/:R, (i)( &e)a8e ?na5 "pon t(is Co"rtGs denia5 o7 revie per its reso5"tion o7 A+ne 20, 968 in +.R. No. L/9-, the (n+ran&e !ommiioner a the appointe' li+i'ator of %o&iate' i the le4al repreentative thereof (o 8a' d"5' a)t 7or Asso)iated and +pon hom +mmon ho+l' be erve'= U T(at even before t(e pro8"54ation o7 t(e S"pre8e Co"rt de)ision on Nove8&er 9, 193/ in %o&iate' v. Banon (e, as )o"nse5 7or Asso)iated, never atte8pted to se)"re ne tit5es 7or (is said )5ient, )onsiderin4 t(at its oners(ip over t(e par)e5 o7 5and )overed &' t(e8 as t(en sti55 +b >+'i&e=" U T(at even after t(e pro8"54ation o7 t(e said S"pre8e Co"rt de)ision, (e never atte8pted to se)"re ne tit5es 7or (is )5ient, &e)a"se &' t(at ti8e Asso)iated (ad a5read' &een ordered disso5ved and 5i"idated, (en)e, to &e represented in a55 instan)es &' t(e Ins"ran)e Co88issioner as 5i"idator U T(at (e onders (o respondent #edro Cardenas as a&5e to se)"re T.C.T. No. /:3 =7or8er5' T.C.T. No. -93/:Ri@a5> in (is na8e in 193:, (en Asso)iated, (i)( rea55' oed Cardenas a )ertain s"8, )o"5d on5' se)"re ne tit5es over t(e par)e5s o7 5and after not before Nove8&er 9, 193/, (en t(e S"pre8e Co"rtGs de)ision in +.R. No. L-91 as pro8"54ated and t(at in (is opinion, t(e iss"an)e to respondent Cardenas o7 T.C.T. No. /:3 as 7ra"d"5ent and irre4"5ar 7or &ein4 it(o"t &asis (en t(e sa8e as iss"ed, so t(at t(e re4ister o7 deeds o7 Ca5oo)an Cit' )o88itted so8e sort o7 8ista
U T(at an'&od' (o i55 atte8pt to oer t(e said par)e5 o7 5and 7or sa5e o"5d &e &ommittin4 a &rime as the 'ipoition of the ame belon4 e<&l+ivel to the (n+ran&e !ommiioner (o is t(e li+i'ator o7 t(e Asso)iated Ins"ran)e % S"ret' Co., In). )onse"ent5', t(e petitioner s(o"5d not entertain an' orr' as said par)e5 o7 5and is not &ein4 disposed o7 not on5' &e)a"se t(e poer to se55 t(e sa8e e;)5"sive5' &e5on4s to t(e Ins"ran)e Co88issioner, &"t a5so &e)a"se t(e %o&iate' (n+ran&e ) *+ret to., (n&. ha no title et over thee par&el of lan' a it 'i' not attempt to e&+re an even before an' after t(e pro8"54ation o7 t(e de)ision o7 t(e Honora&5e Tri&"na5 in +. R. No. L-91 in vie o7 t(e )ir)"8stan)es ear5ier e;p5ained. On Ma' 11, 192, e iss"ed s"88ons on t(e Ins"ran)e Co88issioner as 5i"idator o7 Asso)iated to anser t(e petition. In (er anser ?5ed on Ma' 9, 192, t(e A)tin4 Ins"ran)e Co88issioner t(ro"4( t(e So5i)itor +enera5 dis)5ai8ed dated Kan"ar' -, 193/, (i)( de)ision as a4ain ar8ed on appea5 &' t(is Honora&5e Tri&"na5 (en it denied t(e petition 7or a rit o7 &ertiorari in its Reso5"tion o7 K"ne 2, 193/ =+. R. No. L-/9-> and (i)( on K"5' 9, 193/, &e)a8e ?na5 and e;e)"tor' . T(at &' virt"e o7 t(e a7oresaid de)ision, t(e Ins"ran)e Co88issioner as li+i'ator of %o&iate' (n+ran&e ) *+ret !o., (n&., i vete' b a+thorit of la ith the title to all of the propert, &ontra&t, an' ri4ht of a&tion of ai' &orporation as o7 t(e date o7 t(e order o7 5i"idation =Se). 1:C, par. - o7 t(e Ins"ran)e A)t, as a8ended>
:. T(at an' s"&se"ent sa5e or disposition o7 t(e propert' o7 said )orporation itho+t the knole'4e an' &onent of the herein %&tin4 (n+ran&e !ommiioner and approval b the #i+i'ation !o+rt i &ontrar to la and n+ll an' voi'= 3. T(at a7ter t(e a7oresaid order o7 5i"idation, and disso5"tion &e)a8e ?na5 and e;e)"tor', t(e A)tin4 Ins"ran)e Co88issioner de8anded 7or t(e s"rrender o7 a55 t(e &oo
opposition to t(e 8otion to disso5ve t(e restrainin4 order and dis8iss t(e petition.1 T(e )o88issioner5i"idator a7ter )o8p5ainin4 t(at s(e is sti55 de8andin4 7or t(e s"rrender o7 a55 t(e &oo t(at =(er> "ndersi4ned )o"nse5 (ave veri?ed and )on?r8ed t(e tr"t( o7 t(e stat"s o7 t(e dierent )ases, )ontends inter alia as 7o55osJ 1/. T(at, (oever, d"rin4 t(e penden)' o7 t(e a7oresaid appea5 o7 petitioner Antonio R. Ban@on it( t(is Honora&5e Tri&"na5 and (i5e t(e )ase as sti55 +b$>+'i&e, parti)"5ar5' on 1ebr+ar 8, 96, t(e (erein respondent #edro Cardenas as innin4 part' in a )ase entit5ed G#edro Cardenas v. Qi)toria Qda. de Ten4)o and #a&5o T"a@on,G Civi5 Case No. -31, Co"rt o7 irst Instan)e o7 Mani5a, and (ere t(e Asso)iated Ins"ran)e and S"ret' Co., In). as s"ret' 7or t(e de7endants t(erein, e;e)"ted and 5evied "pon one o7 t(e par)e5s o7 5ands invo5ved in t(e a7oresaid appea5. !5ti8ate5', #edro Cardenas as a&5e to a)"ire t(e 5and in "estion =Lot No. 3, B5o)< No. 13, t(en )overed &' T.C.T. No. -93/:> as (i4(est &idder, 7or t(e 6"d48ent de&t o7 de7endants in said a)tion, p5"s in)identa5 e;penses 7or t(e s"8 o7 #:,122.22 on5' 19. T(at s"&se"ent5' t(erea7ter, said respondents Cardenas, t(r" so8e s)(e8e and devise, s"))eeded in (avin4 t(e tit5e o7 said par)e5 o7 5and trans7erred in t(eir na8es "nder T.C.T. No. /:3, Re4istr' o7 Deeds o7 Ca5oo)an Cit' on :a 5, 965, at a ti8e (en t(e Asso)iated Ins"ran)e % S"ret' Co., In). (ad not 'et earned t(e a"t(orit' to )onso5idate in its na8e said propert', as t(e )ase as t(en pendin4 it( t(is Honora&5e Tri&"na5. As a55e4ed in para4rap( 1/ (ereo7, t(e "estion o7 )onso5idation as reso5ved &' t(is Honora&5e Tri&"na5 on 1ebr+ar 28, 968= 1a 2. T(at &' t(e nat"re o7 t(e de)ision in Civi5 Case No. -1-, CI, Mani5a, as a55e4ed in para4rap( 1: (ereo7, t(e propert' or s"8s o7 8one' re)overed 7ro8 de7endants t(erein hall be reerve' for the benet of the Philippine National Bank 7or t(e p"rpose o7 pa'in4 t(e prin)ipa5 de&torGs =Ma;i8o Sta. MariaGs> o&5i4ation t(erein, and )onse"ent5', t(e Asso)iated Ins"ran)e % S"ret' Co., In). s(a55 (o5d t(e propert' in "estion or t(e s"8s re)overed in said a)tion, in tr"st and 7or t(e p"rpose o7 pa'in4 t(e a7oresaid o&5i4ation o7 Ma;i8o Sta. Maria.
1. T(at t(e Asso)iated Ins"ran)e % S"ret' Co., In). faile' to pa from it on f+n' +n'er it +ret +n'ertakin4, nor from f+n' realie' from the propert 5evied "pon &' virt"e o7 t(e de)ision in Civi5 Case No. -1-, CI, Mani5a, &"t on t(e ot(er (and, t(e prin&ipal 'ebtor *ta. :aria pai' hi on obli4ation ith the Philippine National Bank t("s, releain4 it =Asso)iated Ins"ran)e % S"ret' Co., In).> from it obli4ation +n'er the +rethip +n'ertakin4 it( respe)t to said o&5i4ation o7 Ma;i8o Sta. Maria, and si8i5ar5' (erein petitioner %ntonio /. Banon a releae' from hi obli4ation a &o$in'emnitor in said "nderta
1. T(e i88ediate o&6e)tives o7 t(is petition areJ =a> to en6oin respondent K"d4e ernando Cr"@ o7 t(e Co"rt o7 irst Instan)e o7 Ri@a5, Ca5oo)an Cit' Bran)(, and respondents #edro Cardenas and Leoni5a Ba5"'ot, and t(eir representatives, 7ro8 en7or)in4 t(e rit o7 e;e)"tion and order o7 de8o5ition iss"ed &' said respondent K"d4e in Re4. Case No. C11 in re5ation t o t(e 5ot )overed &' T.C.T. No. /:3 and =&> to en6oin respondent Asso)iated 7ro8 disposin4 its a55e4ed ri4(ts and interests in t(e to 5ots )overed &' T.C.T. No. /:3 and T.C.T. No. :-:9, t(e in6"n)tion in &ot( )ases to &e 8ade ee)tive d"rin4 t(e penden)' o7 t(e re)onve'an)e )ase, Civi5 Case No. 9, ?5ed &' petitioners as p5aintis &e7ore t(e Mani5a )o"rt o7 ?rst instan)e. T(e rea5 and s"&stantive o&6e)tives o7 t(e petition are to see< t(e ri4(t7"5 restoration and re)onve'an)e to petitioners Ban@ons o7 t(eir to Ca5oo)an )it' 5ots, )overed &' T.C.T. :-:9 =sti55 in Ban@onGs na8e, &"t on t(e &a)< (ereo7 is annotated t(e s(eriGs ?na5 deed o7 sa5e in 7avor o7 Asso)iated> and &' T.C.T. No. /:3 =in t(e na8e o7 respondents Cardenases> on t(e 7"nda8enta5 4ro"nd t(at Asso)iatedGs 5ev' in e;e)"tion o7 said 5ots as in tr+t for the benet of the Philippine National Bank for the p+rpoe of pain4 the bank t(e 5oan o&5i4ation o7 Ma;i8o Sta. Maria (i)( Asso)iated (ad 4"aranteed as s"ret' and a4ainst (i)( 5ia&i5it' Ban@on in t"rn as inde8nitor (ad "nderta onl to o&tain releae 7ro8 t(e 4"arant' or e&+rit a4ainst t(e dan4er o7 t(e de&torGs inso5ven)'. (ere t(e de&tor 'ire&tl dis)(ar4ed (is 5oan o&5i4ation to t(e &an< (i)( in t"rn re5eased Asso)iated 7ro8 its +rethip 5ia&i5it' it(o"t Asso)iated (avin4 in)"rred a )entavo o7 5ia&i5it', it is indisp"ta&5e t(at Asso)iated in t"rn o"5d ne)essari5' re5ease Ban@on as in'emnitor and t(e &asi) 19: 6"d48ent o"5d &e inoperable an' +nenfor&eable a4ainst Ban@on.
(en Asso)iated nevert(e5ess premat+rel and &ontrar to the intent an' &on'ition o7 t(e &asi) 19: 6"d48ent 5evied in e;e)"tion on t(e to Ca5oo)an Cit' 5ots o7 Ban@on, t(e interest it a)"ired as )5ear5' i8pressed it( a tr+t &hara&ter . S")( a)"isition o7 Ban@onGs properties &' Asso)iated as ee)ted, i7 not t(ro"4( fra+'-a on Asso)iatedGs part, )ertain5' t(ro"4( mitake-& and t(ere7ore, Asso)iated as &' 7or)e o7 5a, )onsidered a tr"stee o7 an implie' tr+t 7or t(e &ene?t o7 t(e person 7ro8 (o8 t(e propert' )o8es &' virt"e o7 Arti)5e 1:3 o7 t(e Civi5 Code -) sin)e Asso)iated not (avin4 paid nor (avin4 &een )o8pe55ed to pa' t(e &an< (ad no ri4(t in 5a or e"it' to so e;e)"te t(e 6"d48ent a4ainst Ban@on as inde8nitor. Had t(ere &een no 7ra"d"5ent )on)ea58ent or s"ppression o7 t(e 7a)t o7 s")( nonpa'8ent &' Asso)iated or a 8ista to pa' t(e de&t in t(e 8")( 5esser a8o"nt o7 on5' #1:,3., e;)5"din4 interests, in not so dis)(ar4in4 its 5ia&i5it' notit(standin4 t(at it ha' alrea' e+'4ment a4aint Banon as inde8nitor and ta
prin)ipa5 de&t o7 t(e &an 'ears 5ater, a8o"nted 8ere5' to 1V t(e a8o"nt or #1:,3. as o7 A"4"st, 193-, e;)5"din4 interestsJ -7 As a5read' stated a&ove, Asso)iated did not pa' even t(is 8")( 5esser a8o"nt, notit(standin4 t(e #a8pan4a )o"rtGs 6"d48ent a4ainst it in t(e s"it dire)t5' ?5ed &' t(e &an<. ina55', it o"5d &e an o"tra4e on si8p5e 6"sti)e and ini"ito"s "n6"st enri)(8ent i7 a s"ret' s")( as Asso)iated, a7ter ta i8presses properties t("s a)"ired it( a tr+t &hara&ter and )onstit"tes t(e errin4 s"ret' as tr"stee o7 an i8p5ied tr"st 7or t(e &ene?t o7 t(e person 7ro8 (o8 t(e propert' )o8es, in t(is )ase, Ban@on as t(e tr"e and ri4(t7"5 oner o7 t(e properties. . As Cardenas in 5ev'in4 in t"rn 7or satis7a)tion o7 (is #:,122.22 6"d48ent a4ainst Asso)iated on one o7 Ban@onGs 5ots a)"ired on5' (atever interest Asso)iated (ad in t(e 5ot, and it( t(e p5ainti =Asso)iated> b+t for the benet of the Philippine National Bank" t(e severa5 a8o"nts so"4(t &' Asso)iated, a +ret, tota55in4 #-2,:./3. As 7ar as t(eir on )5ai8 a4ainst Asso)iated is )on)erned, t(e' 5i
On Apri5 9, 19:9, t(en K"d4e =no K"sti)e> Kes"s #ere@ o7 t(e Co"rt o7 irst Instan)e o7 Mani5a rendered a de)ision in Civi5 Case No. -319, entit5ed G#edro Cardenas vs. Qi)toria Qda. de Ten4)o, et a5.,G orderin4 t(e de7endants, in)5"din4 t(e Asso)iated Ins"ran)e % S"ret' Co. In)., as s"ret', to pa' )ertain s"8s o7 8one' to #edro Cardenas. T(e 5ia&i5it' o7 t(e Asso)iated Ins"ran)e % S"ret' Co. In)., as ar8ed &' t(e Co"rt o7 Appea5s in a De)ision pro8"54ated on O)to&er -2, 193-, in CA+.R. No. :R. Conse"ent5', p"rs"ant to a rit o7 E;e)"tion iss"ed on e&r"ar' /, 193, t(e Cit' S(eri o7 Ca5oo)an so5d on Mar)( -, 193 at a p"&5i) a")tion to #edro Cardenas, t(e (i4(est and on5' &idder, all the ri4ht, interet, &laim an' title of the >+'4ment$'ebtor %o&iate' (n+ran&e ) *+ret !o. (n&., over the propert p5"s t(e i8prove8ents t(ereon )overed &' Trans7er Certi?)ate o7 Tit5e No. -93/: Done of the propertie a&+ire' from %ntonio BanonE . T(e propert' not (avin4 &een redee8ed it(in t(e one 'ear period, a Deed o7 A&so5"te Sa5e as iss"ed in 7avor o7 #edro Cardenas on Apri5 , 193:. On %pril 23, 965, #edro Cardenas ?5ed a petition it( t(e Co"rt o7 irst Instan)e o7 Ri@a5, Bran)( II, Ca5oo)an Cit', in Re4istration Case No. C11 =LRC Re). No. 113>, entit5ed G#edro Cardenas, #etitioner,G 7or t(e iss"an)e o7 a ne trans7er )erti?)ate o7 tit5e over t(e propert' 8 "estion and to de)5are n"55 and void t(e one previo"s5' iss"ed. On :a 5, 965, a Trans7er Certi?)ate o7 Tit5e as iss"ed &' t(e Re4ister o7 Deeds o7 Ca5oo)an Cit' in t(e na8e o7 #edro Cardenas p"rs"ant to t(e order o7 t(e )o"rt in a7ore)ited Re4istration Case No. C11 dated Ma' -, 193:, as a8ended.: It is o&vio"s t(at sin)e (at Cardenas a)"ired in (is e;e)"tion 7or (is #:,122 6"d48ent a4ainst Asso)iated asonl all the ri4ht, interet, &laim an' title of the >+'4ment$'ebtor D%o&iate'E over the propert ; ; ; Done of the propertie a&+ire' from %ntonio BanonE" and Asso)iatedGs ri4(ts, i7 t(e' )o"5d &e so deno8inated, over Ban@onGs properties ere 8ere5' t(ose o7 a tr+tee, +pra and !ar'ena thereb a&+ire' no abol+te ri4ht, interet, &laim an' title" at all &"t Asso)iatedGs o&5i4ation as tr+tee to restore Ban@onGs 5a7"5 properties to (i8. -. As a point o7 5a, even t(o"4( "nder Asso)iatedGs s"ret's(ip a4ree8ent 4"aranteein4 Sta. MariaGs )rop 5oans it( t(e &an<, it as per8itted, s"pposed5' 7or its prote)tion, to pro)eed 6"di)ia55' a4ainst t(e prin)ipa5 de&tor and inde8nitors even prior to t(e s"ret'Gs 8a
the 4+arant, or to 'eman' a e&+rit t(at s(a55 prote)t (i8 7ro8 an' pro)eedin4s &' t(e )reditor and 7ro8 t(e dan4er o7 inso5ven)' o7 t(e de&tor.
Asso)iated t("s did not even (ave an' va5id )a"se o7 a)tion a4ainst Ban@on as its inde8nitor, &"t )o"5d pro)eed on5' a4ainst Sta. Maria as t(e prin)ipa5 de&tor. And even as a4ainst s")( prin)ipa5 de&tor, it )o"5d not pre8at"re5' de8and pa'8ent even &e7ore it (ad paid t(e )reditor, its a)tion &ein4 5i8ited on5' 7or t(e p"rpose o7 o&tainin4releae 7ro8 t(e 4"arant' or a e&+rit a4ainst an event"a5 inso5ven)' o7 t(e de&tor. As as e8p(asi@ed &' Mr. K"sti)e Re'es 7or t(e Co"rt in eneral (n'emnit !o. (n&. v. %lvare,3 (i5e a 4"arantor 8a' "nder Arti)5e 21 o7 t(e Civi5 Code pro)eed a4ainst t(e prin)ipa5 de&tor, even &e7ore (avin4 paid, (en t(e de&t (as &e)o8e de8anda&5e, =T>(e 5ast para4rap( o7 t(is sa8e arti)5e, (oever, provides t(at in s")( instan)e, t(e on5' a)tion t(e 4"arantor )an ?5e a4ainst t(e de&tor is to o&tai n releae 7 ro8 t (e 4"ar ant', or t o de8 an d a e&+rit t(at s(a55 prote)t (i8 7ro8 an' pro)eedin4 &' t(e )reditor and 7ro8 t(e dan4er o7 inso5ven)' o7 t(e de&tor.G %n a&tion &' t(e 4"arantor a4ainst t(e prin)ipa5, de&tor for pament, before the former ha pai' the &re'itor, i premat+re." . T(e rea5i@ation o7 t(e Ban@onsG ri4(t7"5 o&6e)tives in 5a and e"it' as t("s restated (as so8e(at &een (a8pered and &e)5o"ded &' t(e ineptit"de and sorr' ne45e)t it( (i)( t(e' andVor t(eir )o"nse5 (ave p"rs"ed t(eir re8edies in t(e vario"s s"its &ro"4(t &' t(e8. To )ite t(e 5atest instan)e, t(e pendin4 s"it ?5ed &' t(e8 in t(e Mani5a )o"rt o7 ?rst instan)e, Civi5 Case No. 9, is 7ro8 t(e re)ord t(e rt real &ae that the have properl le' for re&onvean&e o7 t(eir to Ca5oo)an Cit' 5ots &ased on t(eir ne )a"se o7 a)tion t(at it( t(e de&torGs dire)t pa'8ent to t(e &an<, Asso)iated (ad &een re5eased as s"ret' and Ban@on )onse"ent5' 5i+'i&ata and apparent5' a55oed s")( dis8issa5 to &e)o8e ?na5. In rea5it', sin)e Asso)iated never (ad to pa' t(e &an<, Ban@onGs to 5ots, (i)( (ad &een 5evied
"pon premat+rel "nder Asso)iatedGs 6"d48ent a4ainst Ban@on and ere t(ere7ore (e5d &' it in implie' tr+t 7or Ban@on &' 7or)e o7 5a, "'eerve to be re&onvee' to them" F in the ver or' of the in+ran&e &ommiioner, (o a5one and o)ia55' represents and a)ts 7or Asso)iated as li+i'ator . As 8ani7ested &' Asso)iatedGs 7or8er )o"nse5 even (en Asso)iated as a)tin4 on its on "na"t(ori@ed5' and in vio5ation o7 5a, sin)e an or'er for it li+i'ation an' 'iol+tion (ad a5read' &een iss"ed &' t(e Mani5a )o"rt in&e e&ember 3, 965, (e, as Asso)iatedGs )o"nse5, never atte8pted to trans7er Ban@onGs tit5es to Asso)iated sin)e t(e "estion +b$>+'i&e, &e7ore t(is Co"rt and reso5ved on5' per its de)ision in %o&iate' v. Banon o7 November 29, 968, as o7 (i)( ti8e, t(is Co"rt (ad a5read' previo+l a@rme' on A+ne 20, 968 in +.R. No. L/9-, t(e Mani5a )o"rtGs 'iol+tion an' li+i'ation or'er a4ainst Asso)iated t("s re8ovin4 a55 do"&t t(at on5' t(e Ins"ran)e Co88issioner as 5i"idator )o"5d a)t in an' and a55 8atters 7or Asso)iated. :. !nder Se). 1:C, para4rap( - o7 t(e Ins"ran)e A)t as a8ended,/ t(e (n+ran&e !ommiioner a li+i'ator o7 Asso)iated as vested &' a"t(orit' o7 5a it( t(e title to a55 o7 t(e propert', )ontra)ts and ri4(ts o7 a)tion o7 Asso)iated a of the 'ate of the >+'i&ial or'er of li+i'ation, and an' ale or 'ipoition o7 Asso)iatedGs properties or ri4(ts itho+t the knole'4e an' &onent of the in+ran&e &ommiioner a li+i'ator and itho+t the approval b the li+i'ation &o+rt i &ontrar to la an' n+ll an' voi'. A))ordin45', petitioners Ban@ons are, as a4ainst t(eir and t(eir )o"nse5Gs ne45e)t and inattention, nevert(e5ess saved 7ro8 t(e ot(erise 7ata5 )onse"en)es o7 t(e invo
!nder R"5e -, se)tion 'etermination of ai' a&tion. , in'ipenable partie 8"st a5a's &e 6oined eit(er as p5aintis or de7endants, 7or t(e )o"rt )annot pro)eed it(o"t t(e8, and (en)e a55 6"d48ents and pro)eedin4s (e5d a7ter t(e 5i"idation and disso5"tion order a4ainst Asso)iated &e)a8e vo i' for la&k of an in'ipenable part in t(e person o7 t(e ins"ran)e )o88issioner 5i"idator. T(e ins"ran)e )o88issioner as 5i"idator o7 Asso)iated &' a"t(orit' o7 5a as indisp"ta&5' an in'ipenable part it( s")( an inte rest in t(e )ont ro ver sies ae )tin4 t(e 6"d48ent for Asso)iated =a4ainst Ban@on> and a4aint Asso)iated =in 7avor o7 Cardenas> t(at a ?na5 de)ree o"5d ne)essari5' ae)t its ri4(ts =ad8inistered &' t(e Co88issioner in t(e p"&5i) interest and 7or t(e p"&5i)Gs prote)tion> so t(at t(e )o"rts )o"5d not pro)eed t(erein it(o"t t(e )o88issioner5i"idatorGs o)ia5 presen)e. 3. T(e ron47"5 dis8issa5 &' t(e Mani5a )o"rt o7 t(e Ban@onsG re)onve'an)e s"it, Civi5 Case No. 9, as a4ainst t(e Cardenases t("s does not prod")e (at o"5d ot(erise (ave &een 7ata5 )onse"en)es d"e to t(e Ban@onsG 7ai5"re to appea5 7ro8 s")( dis8issa5. T(eir re)onve'an)e )ase as a4aint %o&iate' as prin)ipa5 de7endant re8ains pendin4 in )o"rt. And t(ein+ran&e &ommiioner + li+i'ator of %o&iate', no t(at s(e is 7"55' aare o7 t(e stat"s o7 t(ese ante)edent )ases a7ter s(e ?na55' re)eived on Mar)( 11, 191 t(e vo5"8ino"s re)ords t(ereo7 (i)( (ad (it(erto not &een s"rrendered to (er o)e despite de8ands t(ere7or, is )a55ed "pon to appear 7or Asso)iated in t(e said )ase, i7 s(e (as not as 'et &een d"5' i8p5eaded as s")( 5i"idator. Gith the in+ran&e &ommiioner, a li+i'ator of %o&iate' an' an in'ipenable part no in the &ae, t(e said re&onvean&e +it 8a' no pro&ee' ane andthe !ar'ena po+e &a+e' b the li+i'ator to be '+l implea'e' ane for t(e' are a5so in'ipenable partieinso7ar as t(e ins"ran)e )o88issioner 5i"idatorGs )5ai8 on &e(a57 o7 Asso)iated to t(e 5ot )overed &' T.C.T. No. /:3 iss"ed in t(eir na8e is )on)erned. Herein petitioners see< prin)ipa55' in t(e said )ase t(e re)onve'an)e to t(e8 &' Asso)iated o7 t(eir to par)e5s o7 5and )overed &' T.C.T. No. /:3 and T.C.T. No. :-:9, as a)"ired in e;e)"tion &' Asso)iated, and t(erea7ter, it( respe)t to t(e 5ot )overed &' T.C.T. No. /:3, &' t(e Cardenases, &' virt"e o7 t(e tr+t &hara&ter i8pressed "pon t(e8 and Asso)iatedGs d"t' as implie' tr+tee to restore said properties to t(e Ban@ons. Considerin4 t(at t(e in+ran&e &ommiioner herelf, (o no 5e4a55' )an a5one represent Asso)iated a li+i'ator, (as herein
re&o4nie' +&h tr+t &hara&ter and (as e;pressed t(e &e5ie7 t(at the ai' lot, no le than the other lot &overe' b .!.. No. 8567, ho+l', in A+ti&e to petitioner, be re&onvee' to them on a))o"nt, a8on4 ot(ers, o7 petitioner Ban@onGs re5ease 7ro8 (is o&5i4ation as inde8nitor &' virt"e o7 t(e prin)ipa5 de&torGs s"&se"ent pa'8ent o7 (is o&5i4ation it( t(e #(i5ippine Nationa5 Ban< (i)( 5i
. T(e )ir)"8stan)es t(at respondents Cardenases, inso7ar as t(e 5ot ron47"55' )5ai8ed &' t(e8, )a"sed t(e Ca5oo)an Cit' spe)ia5 dep"t' s(eri to en7or)e on Mar)( -, 192 respondent )o"rtGs )(a55en4ed order o7 de8o5ition and rit o7 possession on the ver 'a t(at t(is Co"rt ordered t(e iss"an)e o7 a restrainin4 order a4ainst t(e en7or)e8ent o7 said )(a55en4ed order and rit, and notit(standin4 t(at said s(eri as d"5' advised &' Ban@on o7 t(e petition at &ar (avin4 &een ?5ed on Mar)( 2, 192, does not 8a, respondent )o"rt s(a55 at Ban@onGs petition )a"se respondents Cardenases to retore the 'emolihe' b+il'in4 or pa Banon the 'etermine' val+e thereof . As to t(e 7r"its o7 possession o7 t(e 5and, it( Cardenas a)
